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Investors Hesitate

Ebullient public markets hoped for an economic recovery throughout the second quarter. But that enthusiasm has yet to extend into life sciences financial deals. Venture capital financing continued to wane; the number and dollar amount of deals fell off moderately. Renewed optimism may be on the horizon, however. At least three venture capital firms—Schroder Ventures Life Sciences; Thomas, McNerney & Partners; and MDS Capital—announced the closing of major life sciences�oriented funds during the second quarter, with total commitments of $402 million, $216 million, and $211 million, respectively.

On the mergers and acquisitions front, there are signs of continued activity, and companies are favoring the acquisition of relatively mature targets. The second quarter included Chiron�s $878 million purchase of vaccine maker PowderJect, one of two companies that produces a flu vaccine approved for use in the United States. Future projects for the merged company include the development of vaccines for meningitis and AIDS. And as M&A marches on, partnerships initiated by major pharmaceutical companies have had increasingly high valuations even though their numbers have steadily dwindled since 1997.

But for many public life sciences companies, the most significant influx of cash last year came from debt: it accounted for fully half of the funds raised by biotech companies in 2002. That�s up considerably from less than one-fifth in 2000 and one-quarter in 1997. This trend may be abating, though. In recent quarters, the growth of the debt burden for public life sciences companies has slowed to levels seen a few years ago when other sources of cash were plentiful.

Copyright © 2003 Acumen Sciences, LLC, All Rights Reserved.

Copyright © 2003 Acumen Sciences, LLC, All Rights Reserved.

Additional charts accompanying text include:

U.S. Life Sciences Venture Capital Investment

Life Sciences Global M&A Announcements

Public and Private Financing by Type in the U.S. Biotech Industry

Notable Second Quarter Life Sciences Deals

Strategic Partnering for Top 20 Pharmaceutical Companies by Sales

Debt for Public Life Sciences Companies



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