Monday, December 21, 2009

2009 Exits/Financings DOTY Nominee: Movetis' IPO

It's time for the IN VIVO Blog's Second Annual Deal of the Year! competition. This year we're presenting awards in three categories--that's 300% more fake prizes than last year!--to highlight the most interesting and creative deal making solutions of the year. The categories are: Big Pharma Deal of the Year, M&A/Alliance Deal of the Year, and Exit/Financing Deal of the Year. We'll supply the nominations (roughly half a dozen in each category throughout December) and you, the voting public, will decide the winners (by voting early and often, commencing once we've announced all the nominees). Strap yourselves in, it's The Race for the Roger™.

It may not be the archetype traditional discovery oriented biotech company, but the IPO by GI-focused J&J spin-off Movetis in early December is by our estimation the best sign so far that public investors are returning to riskier biotech debuts. Any company that gets an IPO done these days could be considered worthy of a DOTY nomination--the company that pulls off the best of the (admittedly small) bunch? We think they're worthy of your vote.

Movetis raised €85 million ($128 million; also, the underwriters have some more time to exercise the overallotment, which could take the total to nearly €98 million UPDATE: Yep, the overallotment was exercised today). That's quite a bit more than China Nuokang Bio-Pharmaceutical ($41mm), Cumberland Pharma ($85mm), Omeros ($68mm), or D-Pharm ($23mm). (We're not throwing Talecris into this particular group and we'll get to Mead Johnson, tomorrow.) And what's more as of this writing the company is trading above its €12.25 per share offer price.

Movetis spun out of J&J at the end of 2006 with about €60.8 million in Series A venture funding led by Sofinnova (pre IPO Sofinnova Partners held 22.5%, Sofinnova Ventures had 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.)

Does Movetis' success bode well for Anthera, Aveo, or Ironwood? Perhaps, but we'd point to the bevy of biotech follow-on offerings too. Investors are returning to biotech--whether because they see a fundamental shift in the value of biotech business or because they figure they can get in at a good price.

We don't believe for an instant that this interest will translate into rosey times across the board for cash-starved biotechs and the VCs that love (and support) them. But we do see investor interest sparking more acquisitions as pharmaceutical companies in the hunt for new drugs figure the market has sunk to its lowest depths.

So cast a vote for Movetis, the pick of biotech's first IPO litter in two years, a ray of hope, and just maybe a sign of an upcoming wave of private biotech takeouts.

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