Friday, November 20, 2009

Financings of the Fortnight Has European Flavor, Movetis Roadshow Fever

Gas up, everyone, it's time for a European road trip. First stop, Turnhout, Belgium, where gastrointestinal biopharma Movetis is gearing up for a trip of its own.

This morning the Belgian J&J spin-out said it filed to raise up to more than €112 million in what could be Europe's first biopharma IPO since Italian biotech Molmed raised €56 million in February 2008 (sorry, MondoBIOTECH).

Is this the kind of discovery-oriented biotech listing that would announce the IPO window is open for the backlog of companies keeping warm by burning through VC cash from insider rounds? Not really.

Movetis spun out of J&J at the end of 2006 with about €60.8 million in Series A venture funding led by Sofinnova (Sofinnova Partners holds 22.5%, Sofinnova Ventures has 16%) and Life Science Partners (16.9%). At the time its lead asset, the newly-approved-in-Europe for a subset of constipation patients Resolor, was already in Phase III. (In exchange for pipeline, J&J held on to 21.2% of the company and received an upfront fee.)

Still this will be a good sign that public investors in Europe are ready to wade back into biopharma plays, even if backing the launch of a specialty product is more than slightly different than backing most other life sciences start-ups.

Movetis said this morning that the price range of the offering was set at €11.25 to €14.25 per share. The offering comprises a public offering in Belgium to retail investors and a private placement to institutions in Belgium and other ex-US territories. The offer opens on Monday and runs through December 2nd, with Movetis shares scheduled to hit the market on December 4th.

The company will spend its haul supporting the commercial launch and post-marketing regulatory commitments for Resolor (prucalopiride) in Europe. The drug, a selective 5-HT4 receptor agonist, received EMEA approval in October for the symptomatic treatment of chronic constipation in women in whom laxatives fail to provide adequate relief.

Movetis plans to launch and promote Resolor itself in markets where it can make do with a lean, specialist sales force. CEO Dirk Reyn told us after the drug's approval last month that in the UK for example, "GI specialists prescribe between 30 and 40 percent" of drugs for this market and where GPs prescribe drugs, they do so under centrally controlled guidelines from bodies such as NICE and local primary care trusts.

In other markets, where GPs have more freedom, Movetis will need to partner to access a primary care sales force. In Italy, for example, "it is more difficult to reach that audience with a targeted approach," Reyn said.

Before leading Movetis, Reyn was head of the worldwide GI marketing group and VP, new business development at J&J's Janssen-Cilag unit. He told us last month that although J&J realized Resolor was unlikely to serve the kind of large, primary care market it was initially intended to reach, smaller companies like Movetis could succeed in smaller, neglected sub-segments of the GI market.

Resolor's label, said Reyn, provides the necessary ingredients for success. By going after patients for which laxatives do not provide adequate relief, "it created the stronger probability of regulatory approval and, secondly, creates a target market that is very defined and which is also more palatable and digestible for payers."

We will see in a couple weeks whether it is also palatable for public investors, too.

Get back in the car, it's time for ...

ThromboGenics NV: Still in Belgium, now, for an hour long drive to the outskirts of Leuven. With significant funding from Belgian and international institutional investors, public Belgian biotech ThromboGenics seems to have gotten the momentum it needs to complete development of its Phase III biologic microplasmin for vitreomacular adhesion. The company announced on November 17 that it raised €42 million ($63 million) by selling 2.6 million shares--approximately 10% of its outstanding stock--for €16, a very slight discount to the 10-day market average. The raise lends weight to the idea that investors increasingly see ophthalmology as an area with large potential and unmet need, or at least an area where they can turn a nice profit. Microplasmin, a potential alternative to surgery also in Phase II for AMD, diabetic retinopathy, and diabetic macular edema, works by dissolving protein formations that link the vitreous to the retina. Beyond microplasmin, ThromboGenics has done a good job of monetizing other pipeline projects through dealmaking. Most notable is its long-term partnership with BioInvent International in which both companies can contribute candidates and split costs and revenues. Initially focused on ThromboGenics’ Factor VIII inhibitor TB402 for deep vein thrombosis and atrial fibrillation, the deal was later expanded to include Thrombo’s placental growth factor (PIGF) blockers. The partners’ work on the latter class of drugs paid off last year when Phase I cancer candidate TB403 from the PIGF program was exclusively licensed to Roche in exchange for €50 million up front and the potential for €450 million in development and commercialization milestones.--Amanda Micklus

NicOx: Three hour drive to Paris, now, where NicOx is tapping into the French government’s latest hand-out to help top-up a planned €30 million private placement. Still short of a US partner (and thus of a partner's money) for recently-submitted naproxcinod, the company says the capital increase will allow it to “significantly advance” its launch preparations for the drug. More specifically, in line with its long-stated goal of becoming a fully-integrated specialty pharma, NicOx will create a specialist sales and marketing infrastructure in the US. The government-supported Fonds Stratégique d’Investissement, set-up late last year to support local mid-sized companies in key growth sectors, will invest €20 million in total across the two-step financing (for a 5.1% stake in the biotech), which will include a subsequent rights issue (when market conditions permit) that may take the total fundraising up to €100 million. (That’s a fair chunk from the FSI, given that average investment size was initially slated at €5-10 million.) CEO Michele Garufi has long worked to secure a commercial partner for naproxcinod, but this now looks unlikely to materialize before the drug is approved. Despite the hit it will take on dilution, the company is right to raise cash while it can, particularly given its downstream ambition. But although this move shows NicOx’s confidence in its product, it should be wary of under-estimating approval risk--even for an anti-inflammatory drug that’s based on a well-known, proven NSAID, and claims better safety than naproxen.--Melanie Senior

And off to Munich, Deutschland! On November 16, Germany-based 4SC grossed €30 million ($44.7 million) in a collateral rights offering of 10 million shares to existing backers. Stock was sold at €3, a 10-day market average. In 2008 the medicinal chemistry and discovery company's drug development pipeline (and expenses) took off when it purchased eight oncology projects from Nycomed, which was exiting the space. 4SC expects the new funds will take it through 2011 and allow it to complete proof-of-concept studies for its two lead candidates: resminostat, an HDAC inhibitor for hepatocellular carcinoma and non-Hodgkin's lymphoma and 4SC101, an oral DMARD being tested with methotrexate for rheumatoid arthritis. --AM

Fate Therapeutics: OK, one stop in the US of A, so we'd probably better fly. Stem-cell concern Fate's $30 M Series B round was led by returning investor OVP Ventures and includes corporate funders Genzyme Ventures, Astellas Venture Management, and a mystery third company. (The corporate venture train keeps on rollin'.) Fate officials told us they won't need cash for two years, but from their list of activities it sounds like they'll spend every penny. One on side, they're racing to create a commercial supply of pharma-grade induced pluripotent stem cells, the kind drug companies can use for all kinds of screening and testing. (They're not the only ones who want to supply the world with stem cells or create screening tools.) Fate could help licensees differentiate cells, or sell them the pluripotent versions. CFO Scott Wolchko said to look for license deals in the next 12 months. The company will also be its own customer. It's got one small molecule in Phase 1 that aims to redirect hematopoetic stem cells and help cord-blood transplant patients recover faster. The drug, FT1050, is the first test of the company's proposition that it can modulate a patient's own stem-cell populations, using small-molecule triggers, for therapeutic effect. OVP's Carl Weissman joined the Fate board, and all the Series A subscribers joined the B round. -- Alex Lash

image courtesy flickr user mrlerone used under creative commons

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