Jump in Life Science M&A

Jump in Life Science M&A

Though M&A activity took a sharp jump in April reaching $29.1 billion compared to just $6 billion in announced transactions in March, activity still lags the pace from a year ago. Overall, M&A activity through April lagged the pace of M&A activity through April a year ago as activity involving U.S. targets fell 25.1 percent and global activity fell 43.4 percent. That's attributable to outsized acquisition made during the first four months of 2011 including Sanofi's $20.1 billion purchase of Genzyme and Johnson & Johnson's $21.3 billion acquisition of Synthes.

The IPO market in April remained unwelcoming to life sciences companies. Osprey Medical, an Eden Prairie, Minnesota-based medical device company, bypassed U.S. exchanges to go public on the Australian Stock Exchange. The company raised $20.8 million through the sale of Chess Depository Receipts. It's the third U.S. medical device company in the past year to look to the Australian market to go public in part because of a more welcoming regulatory environment for medical devices than in the United States. Life sciences companies that went public since January 2011 are down 10.9 percent as a group through April 30, 2012.

On the venture front, U.S. companies raised a total of $698 million in April with bioindustrial financings leading the way with $261 raised. Algae-based biofuels developer Sapphire Energy raised $144 million, the largest venture financing of the month. The therapeutics sector was a close second with $251 million. Argos Therapeutics, which withdrew an $86.3 million IPO in March because of an unwillingness to cut its share price as steeply as public market investors demanded, completed a series D venture financing for $25 million to begin late-stage clinical testing of its personalized immunotherapy to treat kidney cancer.

April also saw the signing of the Jumpstart our Business Startups Act, or JOBS Act, legislation intended to provide easier access to public markets for emerging growth companies. The law lowers the cost and regulatory burdens these companies face in raising capital and being public by providing exemptions to existing securities regulations.

 The hottest subject continues to be health care cost and methods to reduce the health care expense. One of the biggest expense is the "cost of obesity"

US spends over $150 Billion on obesity and its consequences.  Obesity sector along with the Diabetes is getting a lot of attention. Investors, drug and device companies are starting to  explore strategic investments in treatments that can address obesity and diabetes.  GI dynamics,Satiety, ReShape, Onciomed, Enteromedics, USGI. BaraNova, Endo Gastric Solutions. Companies that can use minimally invasive methods to treat obesity. Clearly, with the presence of lap Band maker Allergan in Irvine, CA. Orange County, CA has become hub to such minimally invasive weight loss technology start ups seeking venture capital. OC is also well known ophthalmology hub and now a start up med device hub.

On the partnering side, activity still is off the pace of 2011, but April did see a number of notable transactions including Merck's potential $1 billion deal with Endocyte for its late-stage ovarian cancer therapy. Other transactions reflected the high prices early-stage therapeutic candidates are commanding today. This includes Celgene's potential $250 million deal with Epizyme for its pre-clinical epigenetic experimental cancer therapy and GSK's $223.5 drug discovery collaboration with FivePrime Therapeutics focused on respiratory diseases.