By Michael S. Rosenwald
Washington Post Staff Writer
Monday, June 11, 2007
During the past few months some of the world's largest life-sciences firms -- desperate for new products and technology -- have gone shopping in, of all places, Gaithersburg.
Roche snapped up BioVeris. Price: $600 million.
The nearly $18 billion worth of deals has energized the region's biotech community, with scientists and entrepreneurs congratulating one another. They say the acquisitions help further validate the idea that the region, particularly Montgomery County, is a place of valuable science and ingenuity. Some companies hope the deals help their bids to raise money. Others perhaps foresee a day when they, too, will be able to cash out.
"There has been an awful lot of value created in this region," said Wayne T. Hockmeyer, a former government scientist who founded MedImmune 19 years ago.
Edward M. Rudnic, the chief executive of Advancis Pharmaceutical in Germantown, said: "It's fair to say that multinational companies see Maryland as a significant hub for ideas and innovation and products and technology. These recent deals all point to the fact that the region has matured."
As part of the recently announced deals, none of which has closed, MedImmune will become a subsidiary of AstraZeneca, which will give the region its first big drug company presence. It is a little more unclear what will happen to the employees from BioVeris and Digene, though the latter firm's buyer bases its U.S. operations in Germantown.
And if more regional companies are sold, there is no guarantee those jobs will stay in Maryland. Giving up control is just that: Somebody else, with roots elsewhere, makes the tough calls. For example, although MedImmune chief executive David M. Mott is staying on to run AstraZeneca's new biotech business, the destiny of the Gaithersburg company is largely in the hands of executives in Britain.
The deals highlight the extent to which big international life sciences companies will search the world for smaller companies to keep them ahead of competitors -- an expensive but swift tactic to satisfy investor demand for steady growth.
"It is eat or be eaten. They are trying to get smaller companies so they can continue to grow," said Charles M. Fleischman, a former president of Digene.
Roche, based in Switzerland, bought BioVeris to gain control of powerful testing technology used in life sciences research and drug development. AstraZeneca, based in London, is trying to get into the biotech and vaccine business, for which it had eyed MedImmune for more than a year. And Qiagen, based in the Netherlands, needed Digene and its test for a virus that causes cervical cancer to help extend its reach beyond academic and corporate labs and into commercial diagnostics.
"Companies with products, companies that have the ability to generate revenue, become more desirable for other companies," Rudnic said. He noted that bigger firms are particularly interested in products that have been "derisked," meaning that all the hard, expensive, risky development work has been mostly finished. For example, two years ago MedImmune spent $100 million on a study to help reposition FluMist for children under 5, and AstraZeneca was able to weigh the positive results in making the deal.
Under the theory that bigger companies will gobble up smaller ones for derisked products, other Montgomery County companies could become attractive.
Rudnic's firm, Advancis, is in the final stages of developing a once-a-day dosing of amoxicillin, and the firm has recently said it was weighing a sale. Vanda Pharmaceuticals has two drugs in the final stages of development -- one for schizophrenia, the other for sleep disorders. Human Genome Sciences, a bellwether biotech firm, also has two drugs in final testing, including what could be the first new treatment for lupus in 40 years.
The market value of those companies is each less than the $1.6 billion Qiagen paid for Digene.
In the coming months, biotech observers say, the attention on the region from the deals could help entrepreneurs raise money and perhaps attract other firms to locate here.
"It helps in that people no longer say, 'Where is Gaithersburg? Where is Rockville?' " said Rudnic, who was recently elected chairman of the Tech Council of Maryland. "Entrepreneurs can set up here knowing that they have the ability to draw locally for talent and they know when they go out to raise money people won't question why they have located here."