Sunday, November 18, 2007

Celgene Snaps Up Pharmion: $2.9B

OK…it was just a few weeks ago when I highlighted Celgene’s (NASDAQ: CELG) concentrated activity in Colorado bio, take a look (here). The Colorado bioscape has proved to be an incredibly active market for big pharma in the last year, accounting for nearly a whopping $7 billion in transactions! Just to quickly review these deals included:

  • Merck (NYSE: MRK) and Sirna, approximately $1.1B
  • Endo (NASDQ: ENDP) and RxKintix, approximately $120MM
  • Gilead (NASDAQ: GILD) and Myogen, approximately $2.5B
Add Celgene to the list now who was back in town to acquire Pharmion (NASDAQ: PHRM) for approximately $2.9B. And quite a rich premium it looks to be; at a near 50% premium to the Pharmion share price last close, Celgene will pay shareholders $72 per share, approximately a $25 cash payment and between 0.65 and 0.84 shares per share of PHRM . The cash portion of the transaction will likely be covered by Celgene’s greater than $1B in cash on hand. The deal is expected to close in 1H08.

The acquisition is an impressive multiple, paying over 10X Pharmion’s last 12months revenue of $256MM. Such a multiple however, is not that surprising considering Pharmion has cash flow, an impressive four commercialized products, and a rich developmental pipeline, combine this with pharma’s need to enhance pipelines and the deal is easily comprehended.

Congratulations to President and CEO Pat Mahaffy and the rest of the talented team at Pharmion. They have done something uniquely special and rare, from business model design, execution and through exit. Our community looks forward to what the bio-entrepreneurs have planned next and invite them to take a look at the exciting activity transpiring at Fitzsimons BioBusiness Partners.

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