Thursday, August 26, 2010

Financings of the Fortnight is... the Most Interesting Biopharma Column in the World

FOTF never really goes on summer vacation, unlike those namby-pambies over at DOTW. But as befits the Most Interesting Biopharma Column in the World, we constantly travel far and wide. And when we travel we cannot help but meet other Most Interesting People who want to discuss all manner of things, from protein folding to peregrine falcon migration patterns to the amyloid hypothesis to American trade policy.

Despite having vocal cords that have addressed the United Nations General Assembly and performed Tristan und Isolde -- all in one day -- even we sometimes overdo it. This morning, after a night spent deep in conversation with three well-funded post-doctoral frauleins under the glow of poolside tiki torches and a gibbous subtropical moon, we felt slightly hoarse and downed an emergency anti-logorrheic. (That means this week's installment is short and sweet.)

Still, we can't help but note that all four editor's picks this fortnight underscore the changing nature of biotech venture capital. Heavily tranched rounds are now a mainstay, and perhaps here to stay. We've got two of 'em for you. We also profile an unusual PIPE with four participating VCs who are usually as private as private can be, and word from the feds that the Department of Health and Human Services wants to start a pandemic/emergency/countermeasure venture fund. They'd be wise to check in with Kleiner Perkins, which launched its own $200 million "flu fund" in 2006.

Stay informed, my friends, and when you read about biopharma financing, make sure it's...

Anchor Therapeutics: The peptide drug developer closed on $10 million of its Series B round from inside investors, with a new goal of $15 million – half its original target of $30 million. The company hopes new backers will join TVM Capital, HealthCare Ventures and the Novartis Option Fund, who supplied the first tranche of the new round as well as $19 million in Series A funding in 2008. “A little bit of setting goals is testing the market and seeing what the reality is,” CEO Rick Jones told our Pink Sheet colleagues. Anchor is developing candidates called "pepducins" to selectively bind to G protein coupled receptors. Anchor hopes its pepducins can trigger specific responses inside the cells and avoid side effects often associated with small molecule drugs targeting the receptors. Anchor's most advanced program is a CXCR4 agonist designed to attract stem cells to accelerate healing in fractures and myocardial infarctions. Novartis maintains an option agreement with Anchor that includes over $200 million in potential milestones as well as royalties. -- Shirley Haley and Paul Bonanos

Taligen Therapeutics: Taligen collected a $10 million tranche of its massive $65 million Series B round, bringing to $36 million the contributions of Sanderling Ventures, Clarus Ventures, Alta Partners and High Country Venture since 2008. That’s on top of a $4 million Series A and a small seed round, all in support of Taligen’s development of therapies that target the alternative pathway of the complement system, a surveillance system employed by the body to attack and clear pathogens that may go awry in certain inflammatory diseases. Taligen also revealed a broad patent on its compound TT-30, a replacement of the Factor H protein that regulates reactions in the complement pathway. CEO Abbie Celniker told The Pink Sheet that Taligen is likely to bring TT-30 into Phase I for an unspecified orphan disease in the fourth quarter of 2010. The compound is said to be applicable to a range of indications including age-related macular degeneration, atypical hemolytic uremic syndrome, and paroxysmal nocturnal hemoglobinuria,. Taligen is actively seeking a partner for its ophthalmic program, but expects the rest of its promised Series B money will help it take an in-house candidate into Phase III on its own. -- PB

Achillion Pharmaceuticals: Months after bringing in $22.9 million in a follow-on public offering, Achillion turned to venture capital investors to raise $50 million in a warrant-heavy PIPE financing. At least one, Clarus Ventures, has backed the anti-infectives developer before. Under the deal, announced Aug. 18, Achillion sold 19.755 million shares of common stock at $2.49 per share, its closing price as of Aug. 17. But for an additional $0.125 per unit, buyers also received seven-year warrants to buy 0.35 shares in the New Haven, Conn., firm for an exercise price of $3.1125 a share. Structuring the financing this way put Achillion on the hook to issue another 6.921 million shares, resulting in stock dilution that analyst Brian Skorney of ThinkEquity LLC said would add 69 percent to company’s share count as of second-quarter 2010. “The return to a more venture capital-based investor structure somewhat mitigates the benefit of the raise and will effectively decrease share liquidity,” he wrote in an Aug. 20 note. Joining Clarus, which participated in a 2008 PIPE that netted Achillion $29.5 million, were Domain Associates, Quaker BioVentures and Pappas Ventures. Achillion said it will use the proceeds to move lead candidate ACH-1625, a protease inhibitor for hepatitis C, into Phase II in September, while bringing two other HCV compounds, pan-genotypic protease inhibitor ACH-2684 and NS5A inhibitor ACH-2928, into the clinic in early 2011. -- Joseph Haas

Medical Countermeasure Strategic Investor: As part of a broad review of US medical countermeasure strategy released Aug. 19, an HHS committee is recommending the creation of a government-backed $200 million venture fund to boost startups working on products critical to medical emergencies, terrorist attacks or pandemic outbreaks. Different than BARDA, the agency charged with dispensing so-called "Bioshield" funds to build the national emergency stockpile, the countermeasure fund would invest in companies, explained National Institute of Allergy and Infectious Diseases director Anthony Fauci at a press conference. Known for now as MCMSI, the fund needs Congressional authorization. It would focus on companies developing new drugs to fight multi-drug resistant organisms, novel mechanisms for disrupting pathogenesis through host pathway targeting, and multi-use platform technologies for diagnostics, vaccines/prophylaxis and therapeutics, according to the review report. (The full HHS review is available here, with the MCMSI section on page 15.) As proposed, the fund would operate independently of the government and try to leverage private capital. The HHS committee cited as a relevant model In-Q-Tel, a CIA-funded firm that invests in intelligence high-tech. -- Cathy Dombrowski and Alex Lash

Photo courtesy of flickr user TreyDanger.

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