Archive for July 2014

Pfizer, AstraZeneca Continue to Attempt Merger

July 18, 2014

pfizer logo pic  In early 2014, pharmaceutical giant Pfizer, Inc., began pursuing the possibility of a merger with AstraZeneca PLC. Although talks stalled mid-January, Pfizer recently submitted a new proposal to the company on April 26th, which valued AstraZeneca at approximately $100 billion. The proposal offered shareholders a substantial cash payment as well as stock in the newly combined company. AstraZeneca has once again turned down the lucrative offer, but Pfizer has stated in a press release that it continues to believe that the merger would be extremely beneficial to both companies. Both firms would attain greater footholds in the global market and be able to streamline a variety of financial and operational functions. Furthermore, consumers would benefit from a “strengthened presence in breast cancer,” “opportunities for greater depth in immuno-oncology,” and a “complementary portfolio of important cardiovascular medicines.”

In the days following Pfizer’s proposal, the stocks of both companies saw notable increases. Shares in AstraZeneca jumped by 12.2 percent, while those of Pfizer increased by 4.2 percent. If talks do reignite and a deal is consummated, it would result in the largest foreign takeover of a British business.


Recent Quarters Produce Large Number of Biotech IPOs

July 8, 2014

After a major boom in initial public offerings (IPOs) in the biotech sector during 2013 and the first quarter of 2014, the trend seems to be slowing. Last year, more than 45 biotechnology firms entered the public market, generating over $3 billion. Although some feared that the biotech bubble would soon burst, 29 life sciences start-ups went public in 2014’s first quarter. Together, the companies collected just over $2 billion, which will fund continued research and development efforts by firms like Ultragenyx and Dipexium Pharmaceuticals. However, few industry experts expect the number of biotech IPOs to hold steady at such a high rate. In fact, some even argue that these high-performing stocks could ultimately de-incentivize the buyout activity of large pharmaceutical companies upon which small biotech firms rely.

Moving into the second quarter, biotech companies may want to carefully weigh the pros and cons of pursuing IPOs versus merger and acquisition opportunities. Boards must examine shareholders’ risk and return profiles, the deal’s time to liquidity, and rates of dilution. Biotech investment is often both risky and long-term, so it is ideal to ensure that shareholders are able to reap the benefits of their early risks.