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San Francisco-Unlike many of his Silicon Valley colleagues who abandoned life sciences practices for Internet law in the mid- to late 1990s, Kenneth Clark stuck it out with his biotech clients, which were then not as favored by investors as dot-com companies. Today, the Wilson Sonsini Goodrich & Rosati partner is glad he kept collaborating with biotech firms because partnership transactions are increasingly common-and increasingly valuable. Clark’s practice, exclusively focused on partnering transactions for biotech companies, has so taken off in the last few years that he says it generates “an increasingly larger piece” of the firm’s business. “The market is in a relative peak right now, and if things continue the way it’s been in the last three years, it’s going to be fine for us,” Clark said. Firms such as Fenwick & West, Latham & Watkins and Morrison & Foerster, all of which have also heavily invested in the practice, are handling a record number of biotech partnering deals as well. Although biotech has cooled in the public market in 2005, partnering deals and acquisitions are on the upswing, said Sergio Garcia, co-chairman of the life sciences group at Mountain View, Calif.-based Fenwick & West. “Last year, there were over $17 billion worth of partnering deals, and big pharmaceutical companies are not just looking at late-stage companies, but also smaller, early-stage biotech startups,” Garcia said. The reason: Big drug companies are racing to acquire biotechnology companies or their products in search of a new generation of blockbuster drugs to replace older products with expiring patents. And the intense competition for new drugs pits pharmaceutical giants in bidding wars-and generates deals with ever larger price tags. “I’ve been doing partnering deals for biotech companies for 21 years now, so that’s nothing new,” said Clark of Wilson’s Palo Alto, Calif., office. “But what’s new is that partnering transactions are getting bid up so high that, for the first time ever, some deals that start out as partnerships end up becoming acquisitions.” One of Clark’s clients, Rinat Neuroscience Corp.-a venture-backed company developing drugs for pain, Alzheimer’s disease and other neurological disorders-was recently bought by Pfizer Inc. for an undisclosed amount. Newspaper reports valued the deal at several hundred million dollars. The deal, according to Clark, originally started out as a partnership transaction. “This is an all-cash-up-front transaction, and it is significant because the company is only three years old, and not a ton of money has gone into it yet,” Clark said. “This trend is very good news for [venture capital] firms, which have been struggling to find the right investment model.”

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