German Biotechs Consolidate Amid Weak Sector

Strategic Insights -

The pace of consolidation in Germany's biotechnology sector continued Tuesday as two Munich-based biotech startups, Nadag AG and Sireen AG, agreed to merge and form Sirenade Pharmaceuticals AG. The move comes on the heels of other high-profile mergers in the sector, including the linking of DeveloGen AG and Peptor Ltd. in November and the merger of Schering AG and Astex Technology Ltd. in October. The combined entity, Sirenade Pharmaceuticals, will seek an additional €20 million in funding, having already raised €11 million from existing shareholders.

Key Takeaways:

  • Nadag AG and Sireen AG agreed to merge and form Sirenade Pharmaceuticals AG, a move that is part of a broader consolidation of German biotechs.
  • The combined entity will seek an additional €20 million in funding, having already raised €11 million from existing shareholders ABN Amro NV, Deutsche Venture Capital, Renaissance Ventures LLC, and 3i Group plc.
  • The merger is the third such consolidation in nearly as many months, highlighting the weakness of the German biotech sector.
  • Nadag AG, formed in 1999, is developing treatments for degenerative diseases such as Parkinson's and Alzheimer's, while Sireen AG, founded in 2002, focuses on cancer treatments.
  • The combined entity will be led by Nadag chief executive Pierfausto Seneci, who took the helm of Sirenade Pharmaceuticals following the merger.
  • Sireen AG's chemical background fits well with Nadag's biological focus.
  • The merger agreement was signed in December, following talks that began in June.
  • No financial details were released, though one source familiar with the companies said the most recent valuation for the combined group was slightly above €15 million.

Statistics:

  • €20 million: the additional funding sought by Sireenade Pharmaceuticals
  • €11 million: the amount already raised from existing shareholders
  • €15 million: the most recent valuation for the combined group
  • €5.5 million: the initial financing provided to Nadag AG in 1999
  • €5 million: the amount raised by Sireen AG in its first round of financing
  • €400,000: the research grant won by Sireen AG from the Bavarian Ministry of Economics in 2008

Sources:

  • Reuters: "German biotech firms tie the knot"
  • The Deal: "2 Munich Biotechs Merge to Take on U.S. Rivals"
  • Associated Press: "German biotech firms merge, seeking funds"
  • Nadag AG's website: "Company Overview"
  • Sireen AG's website: "Company History"