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BioPharm Executive: Biotech's Dog Days


8/25/2009 7:19:47 PM

Biotech's Dog Days

Ah, the dog days of summer...those long, glorious days that make it impossible to get the kids to sleep before 10 PM. They're called the dog days, by the way, because Sirius, the Dog Star and the brightest star in the heavens, used to rise before the sun during the hottest period of summer, at least in the northern hemisphere. The ancient Greeks used to sacrifice a brown dog to the star, thinking its rage was the cause of all the hot weather.

Some of the brightest stars in biotech's firmament are causing a bit of trouble right now, too, and experiencing not a little rage. There's been a dearth of dealmaking over the past month, but at least one big argument about an existing partnership: Biogen Idec is not the least bit happy about how it's being treated by Elan, now that the latter company is all cuddly with Johnson & Johnson.

On the surface, it would seem a lot of fuss over very little. Biogen doesn't like the fact that J&J has an option to help Elan finance a buyout of full Tysabri rights in the event Biogen is acquired. But in fact, that's a big monkey wrench in the works. Elan has right of first refusal on Tysabri in the event of a change of control at Biogen. Until recently, that didn't look like much of an issue. Swimming in debt, Elan was actually considering selling off its own rights earlier this year. A big pharma company looking at snapping up Biogen didn't have to worry about Elan outbidding it on what is, after all, the most attractive asset at Biogen. Now, with the financial might of J&J behind it, Elan could queer any potential acquisition deal. Jim Mullen may have proven a match to Carl Icahn, but I'm not sure if he saw this coming. We'll see how the battle shapes up.

Genzyme, meanwhile, may be seeing its own star dim. Just as potential competition to its flagship drug Cerezyme is maturing, the company has been forced to throw away much of its own inventory because of manufacturing problems. It's an incredible gift to would-be competitors Shire and Protalix, and there's speculation it could result in Genzyme itself being acquired. In the same year that biotech lost its brightest star to Roche, that would be a pity.

Stay cool and keep your dogs safe.

--Karl Thiel

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