Financings of the Fortnight: Appetite for Risk?

Cash continues to flow into biotech offerings big and small. On the large side, Elan and UCB each raised money through debt offerings--Elan pulled in $625 million through the sale of senior fixed rate notes due in 2016 and UCB raised €500 million from senior unsecured convertible bonds due in 2015. UCB planned to raise €350 million then upped that to €450 million, and then sold its overallotment. We highlight some of this fortnight's more interesting venture rounds below.

Besides some creative dealing that saw Vertex sell milestone payments and Valeant buy out the milestones it might owe to former Dow Pharmaceutical Sciences shareholders, we witnessed the return of the biotech IPO this fortnight. Last Wednesday Talecris raised $550 million in its own IPO; not quite a cash-burning biotech, but still noteworthy in the eyes of FotF.

More interestingly, late last night Omeros priced 6.8 million shares of common stock at $10 apiece--right at the low end of its anticipated range. Omeros' lead drug is in Phase III studies to treat pain and inflammation during and post arthroscopic surgery, and the company now has $68 million to finish those trials and get it's product launched.

Is there an appetite for risk out there? We think the answer is yes [UPDATE: even if as of 1pm ET Omeros' shares were trading down 13%]. Of course everyone is still waiting on Anthera's debut; success for that company's impending IPO could open the window a crack more.

Meanwhile let's see how hungry you are for another installment of ...


Epizyme: The epigenetics-focused biotech Epizyme pulled in $32 million in Series B money this week, with backing from existing investors, KPCB and MPM and new investors, Bay City Capital, Astellas Ventures, and Amgen Ventures. (Corporate venture plays a role! Who woulda thunk?) Epizyme is one of two companies leading the epigenetics vanguard, an emerging area of science that aims to understand how misregulation of a second layer of genetic information—the packaging of DNA into chromosomes—can result in human disease. The biotech’s main competitor is Constellation Pharmaceuticals, which announced the third tranche of its Series A earlier this summer. (You can read more about both in this March 2009 START-UP feature.) Both companies are of a type—built by preeminent scientific founders and A-list venture backers, the biotechs are looking to build drugs that specifically block a family of proteins called histone methyltransferases. (Constellation is also working on a related family, histone demethyl transeferases.) Think of it as a platform approach, albeit one limited to a family of biologically related targets, similar to the business model Sirtris Pharmaceuticals employed so successfully with its sirtuins. Epizyme will use the new money to push its lead programs into proof-of-concept studies. If successful, those studies would provide evidence that HMT inhibition is a better approach than inhibiting histone deactylase, another enzyme involved in the epigenetic process that hasn’t exactly yielded many effective therapies beyond Merck’s Zolinza.--Ellen Licking

Threshold Pharmaceuticals: By our count, PIPEs and/or registered direct offerings occurred at a pace of about one per day in the biotech sector during the past two weeks. Of these, the largest was the $35 million raised by Threshold, a company focused on the development of oncology prodrugs targeted at and activated by hypoxic areas within the tumor environment. The cash comes at an opportune time: Threshold had only $9.6 million in cash and equivalents at the end of the second quarter, down from $20.3 million entering the year. Redwood City, Calif.-based Threshold said this summer that its cash would last into first-quarter 2010, as it expected to burn between $19 million and $21 million during 2009. Lead compound TH-302, a novel small molecule candidate, is being studied in Phase I and Phase I/II trials as both monotherapy and in combination with several chemotherapy regimens in solid tumors. The new investment includes significant warrant coverage. New investors including Federated Kaufmann Fund, Frazier Healthcare Ventures and Great Point Partners LLC, as well as existing institutional investors, purchased one common share plus a five-year warrant representing 0.4 shares for a unit price of $1.91. The pricing was based on the stock’s consolidated closing bid price as of Sept. 29, plus 5 cents. The warrants can be exercised at $2.23 per share. --Joseph Haas

Adimab: Antibody discovery play Adimab added just over $8 million to its coffers in a Series D round last week. Interestingly, life-sciences neophyte Google Ventures led the round, and was joined by existing Adimab backers OrbiMed Advisors, SV Life Sciences, Polaris Venture Partners and Borealis Ventures. Google Ventures' Bill Maris, who worked in neuroscience research before moving to finance, is joining Adimab's board. Adimab uses massive computational power to model the human immune system and build libraries of antibodies in silico. Those libraries are translated into synthetic DNA by an outside firm and then engineered into yeast. CEO Tillman Gerngross told our colleagues at "The Pink Sheet" DAILY that there was no link between the biotech's own bioinformatics and Google Ventures' parent and sole limited partner, Google. But Gerngross said the two sides have a "joint vision" of how to use computational power to discover drugs. He said there would be "interactions" between Adimab and Google beyond the investment but declined to elaborate. Check out our previous coverage of Adimab's discovery-only strategy here.--CM

Auxilium Pharmaceuticals: Just weeks after a favorable FDA committee recommended approval for its Dupuytren’s contracture treatment Xiaflex, Auxilium Pharmaceuticals has grossed $119 million in a FOPO of 3.45 million shares (including the 450k-share overallotment exercise by book-running manager Jefferies & Co.) at $34.50. The price was actually low compared with what the company had been trading at--between $35-36 in the week-and-a-half prior to the announcement of the financing on September 25. But the stock had jumped to that range in mid-September from the high $20s/low $30s seen in August after Xiaflex was boosted by a unanimous vote from FDA’s Arthritis Advisory Committee; Dupuytren's contracture is a connective tissue disorder in which thickening of the fibrous layer beneath the skin prevents normal movement of the hands and fingers. A PDUFA date has not been set (the original August 28 date was missed), and it still looks like Auxilium faces some challenges in educating physicians on the drug's proper administration so as to avoid severe side effects including tendon ruptures. One option on the table is to mandate a REMS program that would allow only certain doctors--such as those trained to treat Dupuytren’s--to administer the drug. If approved, Auxilium plans to do the marketing of Xiaflex in the US, where it already has a 190-rep sales force promoting its testosterone gel Testim. As for elsewhere, last year Pfizer paid $75 million up front and promised another $410 million in total milestones in a deal that gave the Big Pharma rights in the 27 EU-member countries plus 19 other European and Eurasian territories. --Amanda Micklus

image from flickr user emdot used under a creative commons license