M&A Heats Up, VC Cools
STACY LAWRENCE
Late fall and early winter were a temperamental time for life sciences funding. As the handful of companies that sneaked out the initial public offering window floundered on the public markets, other companies that had already filed dragged their heels. After a flurry of activity in October and early November, the following several weeks were devoid of life sciences IPOs. Still, there were four new filings in November and early December: Anadys Pharmaceuticals, which focuses on hepatitis C treatments; Corgentech, which is developing treatments that manipulate gene expression in disease processes; the cancer detection firm Immunicon; and Symbion Healthcare, a chain of outpatient surgical centers.
Speculation continues to abound among industry watchers about the continuing fate of the IPO environment in 2004. Amid this uncertainty, early data suggest that venture capital investment cooled for October and November. But that�s a relatively typical trend for the first two months of any final quarter.
The mergers-and-acquisitions market was livelier. In October, the value of announced M&A transactions in the life sciences hit almost $36 billion. That�s still a distant second to the $61 billion total in July 2002, when Pfizer announced its merger with Pharmacia. But it�s the first time since this deal that the value of life sciences M&As has risen so appreciably.
This activity was driven largely by the announcement of a $16.4 billion deal between the two leading Blue Cross Blue Shield Association insurers: Wellpoint Health Networks and Anthem. Additionally, General Electric�s acquisition of the medical imaging company Amersham Biosciences for $9.8 billion also helped to raise the total amount of announced M&A transactions. And two health care providers, UnitedHealth Group and Cardinal Health, announced acquisitions worth $2.9 billion and $517 million, respectively.
The average amount of venture capital invested in biotech companies that went public in 2003 more than doubled compared to those that launched in 2000, while IPO valuations fell more than one-quarter.

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Additional charts accompanying text include:
U.S. Life Sciences Venture Capital Investment
Notable Life Sciences Deals
Biotechnology Valuations for Newly Public Companies
Average Venture Investment for Biotech Companies, by IPO Window
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