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Corporate lawyers haven’t had much to celebrate since the Internet bubble burst, but a recent stock market run on life sciences companies is breathing new buoyancy into some practices. A dismal deal environment January through June has since given way to a boomlet of public offerings for life sciences companies. And that has attracted the interest of venture capitalists, who lawyers say have begun doing more financings in the sector. “There’s been a veritable explosion of transactions for life sciences companies,” said Alan Mendelson, a Latham & Watkins partner. “Venture capitalists see [life sciences] companies are ready to raise money in the public markets, and it gives them confidence to make some additional investments.” Lisa Haile, a Gray Cary Ware & Freidenrich partner in San Diego, said it was inevitable that venture capitalists would begin paying attention to industries other than information technology. “You can’t just invest more and more money in communications companies and the Internet,” Haile said. “People are finally understanding they can’t keep putting all their money into technology, and there really is something to this life sciences field.” Since June, Haile, who specializes in intellectual property counseling, has conducted 10 due diligence reviews on behalf of investors looking at prospective investments. She says that’s double the number of due diligence projects she did in the first half of the year. Mendelson says he is currently working on three IPOs in the sector, one for a company client and two for underwriters. Last week he launched a fourth IPO, with the hope of filing documents with the Securities and Exchange Commission in January. He’s not alone. Corporate lawyers with significant life sciences practices have enjoyed a bump in business in recent months. Frederick Muto, a Cooley Godward partner in San Diego, has seen an even more dramatic increase in life sciences work since January. Muto estimated that at the start of this year, he was devoting about 15 percent of his time to life sciences companies. Now, they demand most of his time. “They’re spending money on lawyers,” Muto said. The deals run the gamut from early-stage venture capital financings to public offerings, he said. The momentum appears to be building. Muto said Cooley’s life sciences group has five IPOs in the pipeline with another 10 companies preparing to file registration documents with the SEC later this month or early next year. The pace of life sciences companies raising money on the stock market picked up in the latter half of this year, according to Thomson Financial. Since June, 10 companies went public, while in the first half of this year there were no life sciences IPOs. And in the latter half of this year, more public companies headed back to market to raise money selling stock than in the first six months of the year. Just 19 publicly traded life sciences companies raised money in the stock market from January through June. But since the beginning of July, 47 life sciences companies have staged follow-on offerings. Venture capitalists are also showing renewed interest in life sciences companies, according to investment data by PricewaterhouseCoopers. VCs poured $1.25 billion into biotechnology and medical device and equipment companies during the third quarter of this year, a 45 percent jump over the first quarter’s $860 million and a 25 percent climb over the second quarter’s $1.01 billion. In Silicon Valley, J. Casey McGlynn, a Wilson Sonsini Goodrich & Rosati partner, said VCs appear more willing to do early-stage deals than in the past. Plus, the investors doing the deals are more sophisticated, he said. “What happened during the Internet bubble is a lot of diversified funds stopped investing in life sciences,” McGlynn said. “But life sciences funds got started and the bar is a little higher because of the expertise needed to participate in biotechnology.” McGlynn predicts the recent deal activity, particularly in the latter part of the year, means momentum is building, and life sciences could help law firms start off the new year on more solid footing. “The life sciences practice has been growing during the downturn,” McGlynn said. “It’s definitely not the tail end as things are continuing to build.”

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