Corporate Financing Week
February 2005

Biotech M&A will be as active or more this year against last as larger companies look to acquire specific technologies or revenue and because smaller companies do not have ready access to the IPO market. Eric Edmonson, a partner at investment bank Seven Hills Partners in San Francisco that does a lot of work in the sector, said often smaller companies might have a good technology or product, but may require the distribution network of a larger entity.

Edmonson expects the average deal size to range between $50-80 million for transactions under $500 million. Medical devices and advanced diagnostics are areas that will probably be active. As examples of the types of marriages we might witness more of, he cited pharmaceutical giant Pfizer Inc.'s recent purchase of Angiosyn, a biopharma company that makes products to treat ophthalmic diseases, for $527 million and advanced diagnostics company Nanogen's buy of Epoch Biosciences, a genetic diagnostics company, for $97 million.