The Fourth of July was no picnic for the legal team at San Diego’s Seragon Pharmaceuticals. While other San Diegans were relaxing during the long holiday weekend, they were working through mountains of paperwork and filing notifications related to the $1.7 billion buyout offer from Genentech that Seragon had accepted a few days earlier.
For most of them, it was déjà vu all over again. The same legal team also worked through last year’s Independence Day holiday on Johnson & Johnson’s $1 billion acquisition of Seragon’s predecessor company, Aragon Pharmaceuticals.
“I joked with our lawyers, because literally a year ago on the Fourth of July weekend we were in the thick of the Johnson & Johnson deal,” Seragon CEO Rich Heyman said. “I semi-promised our guys, wink-wink, that a year from now I wouldn’t make them wreck their Fourth of July three years in a row.”
As the founding CEO of both Aragon and Seragon, Heyman found a way to make lightning strike twice in the same office building in San Diego’s Del Mar Heights. Before selling Aragon, which had developed a new drug for hormone-driven prostate cancer, Heyman spun out Seragon to advance a similar, pre-clinical program for metastatic, hormone-driven breast cancer.
“These are two really big deals,” said Jon Norris, a managing director at Silicon Valley Bank who has tracked the sale of private, venture-backed biotechs across the U.S. since 2005. Each would rank in the top 10 of such deals, Norris said. Put together, the sale of Aragon and Seragon may set a new high for value creation at a private, venture-backed biotech.
“It’s amazing to me how quickly he was able to do two deals,” said Bob Baltera, who knows something about beating the odds in life sciences M&A. As the former CEO of San Diego’s Amira Pharmaceuticals, Baltera oversaw Amira’s sale to Bristol-Myers Squibb in 2011 for a total of $475 million. Amira also kept some other drug candidates out of its deal with BMS, which led to the creation of two new companies, Panmira Pharmaceuticals and Inception Sciences.
There are a few examples of similar deals—Amgen spun out Redwood City, CA-based Relypsa about four months after acquiring Ilypsa in 2007, and the co-founders of Peninsula Pharmaceuticals went on to start Cerexa with several antibiotics from Peninsula’s drug portfolio after Johnson & Johnson acquired Peninsula in 2005. Both of those spinouts, however, came after big pharma had closed on its buyout.
At Aragon, Heyman said an early “aspirational goal” was to find a big pharma buyer that would consider letting … Next Page »