Trends usually take at least a few months to get started. In biotech's case, they can seem to brew up like a squall and pass just as fast. So more than a few analysts spent some time yesterday scratching their heads over the question of whether or not the Avila-Micromet buyouts portended an M&A blitz.
Minyanville added in Roche's $5.7 billion hostile bid for gene sequencer Illumina and headlined it as a signal for the "merger mania" ahead.
"M&A Frenzy?" responded a skeptical Michael Gilman, (@Michael_Gilman) the CEO of the venture-backed Stromedix, on Twitter. "C'mon, people. Sample size."
To be fair, veteran biotech writer Brett Chase (@brettchase) led with his conclusion that the buyout news portends a "busy year" ahead, which is not quite the same thing and probably closer to the mark.
Not to be outdone, CNBC sized up yesterday's news with this promise: "Major wave of biotech mergers expected."
Whether we're about to be hit by a chest-thumper or a swelling tsunami, though, has yet to be seen. But there's a good basis for all the speculation. Big Pharma took its best shot at the mega-merger and didn't make out all that great. In this new open R&D environment we've been seeing, where biotechs emerge as the R&D engines of the big companies, there's plenty of appetite for the bolt-on deal that won't bet the bottom line on success.
True, the premiums being paid for hepatitis C companies, where even preclinical licensing news can have an impact on investors, indicates that that particular field may soon be overheated. But there's a lot more deal-making activity ahead for developers--which in general can't reasonably look forward to an IPO anytime soon, unless you're led by Christoph Westphal.
Add it all up and you fall somewhere in between a frenzy and a hopeful surge. They're both good for the industry, where value creation remains a very big issue. You're going to have to look past the headlines, though, if you hope to decipher the most important trends in this business. - John Carroll (email | twitter)