Roche on Spending Spree

This post was commissioned on July 23, 2008, and it was categorized as M&A.

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First Roche offers to buy Genentech for ~$44B and in two consecutive days has inked two more deals.

Yesterday, in its second RNAi play in a year, Roche bought Mirus Bio for $125M. The acquisition should add value to the July 2007 preclinical discovery deal with RNAi leader Alnylam. Under the agreement, Mirus will be split into two separate entities based on core competency (RNAi research vs nucleic acid reagent sales).

In the second deal, Roche acquired Arius Research for $189M USD (C$191M). Roche said the move would give it access to a new screening platform for antibody therapeutics, FunctionFIRST, which rapidly identifies and selects antibodies based on their ability to affect disease before progressing into clinical development.

So what do these acquisitions mean?

I think they mean that Roche, at least partially, gets it.

Eighteen years ago, Roche had the insight to acquire majority stake in a bleeding edge biotechnology company in a first-of-its-kind deal and it undoubedly paid off: an increasingly large part (20%-30%) of Roche’s revenue is from Genentech’s major biologics: Avastin, Herceptin, Tarceva and Rituxan.

These small deals for platform technologies and know how in RNAi and mAb’s only strengthens Roche’s overall position away from small molecules.

These small synergistic deals can be paid for basically with petty cash and can potentially add value starting the minute the deals close. I’m a huge fan of deals under $200M that have potential for tremendous upside and Roche nailed two within a week.

- Mirus release @ Biospace
- Arius release @ Bloomberg

Theoretically Related Posts

August 13, 2008 -- Genentech Drops The Other Shoe (0)
July 21, 2008 -- Will Roche Kill Independent Genentech? (0)
January 30, 2009 -- Roche makes lowered, hostile offer for Genentech (AP) (0)
August 22, 2008 -- King Tenders All Cash $1.4B Unsolicited Bid For Alphama (0)
November 25, 2008 -- Roche Pays Pittance for Memory Pharmaceuticals (0)
October 23, 2008 -- No Rumors For You. Come Back. One Year (0)
September 10, 2008 -- ImClone Throws Down and Announces Additional Suitor (0)
September 2, 2008 -- Shionogi Acquires Sciele Pharma for $1.4 Billion (0)
July 7, 2008 -- Shire Ponies Up For Jerini (2)
June 19, 2008 -- ThromboGenics and BioInvent Ink Deal With Roche (0)

This post was constructed by

Eben Tessari

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Eben is a highly caffeinated business development associate at a small, cash sensitive pharmaceutical company somewhere in Massachusetts. He enjoys cliche-less banter, compartmentalization, non-equilibrium thermodynamics and NPV analysis. Agree or disagree with what he's posted? He encourages comments.

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