Friday, December 18, 2009

Financings of the Fortnight Needs a Top-Up

Sometimes, we need a little extra. Know what we mean?

A little extra sleep--just five more minutes... Maybe just one more beer, sure. OK just one more holiday cookie ... an extra day to finish the 'Financings of the Fortnight' post. But this past couple weeks has been top-up time in biopharma land too. And biotechs sleep, drink, and eat cash.

We joked earlier on the blog that "flat rounds are the new up" has been replaced by "second closes are the new flat rounds." True?

arGEN-X said on Dec. 3 it added €3 million to its Series A; Zogenix said on Dec. 7 that it added $35 million to its Series B; On-Q-Ity said on Dec. 14 that it added $5 million to its Series A; Epizyme said on Dec. 8 that it added $8 million to its Series A; Evolva said on Dec. 14 that it added CHF 21 million to its post-Arpida deal Series B.

OK none of these extensions are in lieu of less-dilutive-next-round-money-because-we-couldn't-get-new-investors. They're more like that scene in a movie where the bus/train/trolley is rolling away/leaving the station and that one guy who is late is running to catch it and there's someone on the bus/train/trolley reaching out .... and finally they get on board. They always seem to make it, don't they.

In any case it sure seemed like everyone has been squirreling it away for the long winter. In fact as we prepared for our annual January feature in Start-Up about the previous year's most intriguing Series A financing deals we noticed that there were at least a dozen Series A top-ups in 2009--and that only includes biotech and diagnostics firms.

Meanwhile, this is your last Financings of the Fortnight column until 2010. Happy holidays!

China Nuokang Bio-Pharmaceutical: Hoping to take advantage of China's recent health care reform initiative (which includes investing RMB850 billion [$120 billion] in China to improve access to medicines and reinvigorate R&D)? Several Chinese companies are, and a few have rushed to tap into investor interest by completing IPOs as 2009 comes to a close. Most notable among them was Sinopharm, the largest drug distributor in the country, which grossed $1.13 billion in an oversubscribed offering on the Hong Kong stock exchange in September. Just this past fortnight, China Nuokang Bio-Pharmaceutical netted $38 million in an IPO of 4.5 million ADSs on the Nasdaq Global Market. (Selling stockholders also offered 473k shares). Shares were sold for $9, a dollar below the low-end of its anticipated $10-12 price range, and so far not so good--the stock closed at $8.67 on the first day of trading and while it’s crept up a little, the price still hasn’t hit or passed $9. Known for its strength in hematological diseases, Nuokang holds 38% of the Chinese hemocoagulase market with its pit viper venom-derived Baquting (batroxobin) for bleeding control. The drug accounted for 90.1% of the company’s $33 million in 2008 net revenue. Nuokang completed a $17 million Series A financing in 2007 from Sequoia Capital China Fund and HBM BioMed China, which own 13% and 2%, respectively, post IPO (HBM was one of the selling shareholders and previously held close to 5%). Another deal worth noting in the Chinese IPO space: Concord Medical Services, which runs radiology and diagnostic imaging centers throughout China (so somewhat outside of FOTF’s biotech focus but still worth a mention), raised $132 million in its IPO of 12 million ADSs at $11, also this past fortnight.--Amanda Micklus

Dendreon: In one of three follow-on public offerings that netted more than $400 million this month, the Seattle biotech, anticipating approval of its prostate cancer immunotherapy Provenge, raised $409.5 million from the sale of 17.25 million shares of common stock (including the overallotment) at a price of $24.75. (Vertex raised $488.4 million in a FOPO this month, while Human Genome Sciences netted $456.5 in an offering of its own, as you know from this FOTF post.) Dendreon has plenty of plans for the new funds – in addition to hiring manufacturing, sales and marketing, quality and other personnel in anticipation of the Provenge launch, the biotech also will use the cash to accelerate the build out of new facilities in Atlanta and Orange County, Calif., while also adding capacity at its Morris Plains, N.J. site. To illustrate how far Dendreon has come in less than two years, the company netted $46 million in an April 2008 FOPO, placing shares at a price of $5.92 apiece.--Joseph Haas

Afferent Pharmaceuticals: Is this Palo Alto, Calif.-based new company focused on chronic pain therapeutics a Roche spinout or something else entirely? Few deal terms were forthcoming but Afferent announced its launch Dec. 16, with a $23 million series A round led by Third Rock Ventures and Pappas Ventures, with additional investment by Domain Associates and New Leaf Venture Partners. The company’s initial efforts will center on a Phase I P2X3 receptor antagonist (AF-219) licensed from Roche (the license included the Big Pharma’s entire P2X3 program), but Chairman Kevin Starr, a partner with Third Rock, did confirm that Roche also will hold an undisclosed equity stake in the newco. Whether the equity piece is Roche’s only consideration in the deal or if it received a licensing fee and/or potential milestones and royalties related to the P2X3 program or in fact a future claw-back was not revealed. Roche successfully completed two Phase I studies of the first-in-class, orally delivered molecule, and Afferent now plans to begin a Phase II program to study the compound in chronic pain conditions such as osteoarthritis, back pain, visceral pain and neuropathy. Although a victim of Roche’s ongoing pipeline review following the merger with Genentech, P2X3 antagonists are thought to offer significant promise in chronic pain because of their potential for specific targeting, as well as the likelihood of a better side-effect profile than current analgesics.--JH

Molecular Partners: There appears to be no let-up in investor interest for next-generation biologics platform technologies--or ophthalmology plays for that matter. Molecular Partners, the Swiss biotech that has deals with Centocor, Bayer-Schering and Roche, said this week that it raised CHF 46 million in a Series B led by new investor Essex Woodlands Health Ventures, with participation from all existing investors (Index Ventures, Johnson & Johnson Development Corporation, BB Biotech Ventures and Endeavour). The company's lead compound targets VEGF in ophthalmic indications and this cash should be enough to push it through to clinical POC, according to the biotech. One of the firm's investors tells us that the company's DARPin platform is "the next big thing." (If we had a nickel ...) But we can't help but think of ESBATech's recent deal with Alcon (discussed at length in this feature) when musing about the fate of platform biotechs with eye drugs in leading roles: whether or not Molecular Partners is the next big thing, could it be the next big ophtho-carve-out? --Chris Morrison

image by flickr user Jeremy Brooks used under a creative commons license.

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