There was an unexpected twist last weekend in the health care reform implementation: Docs based in the Delaware Valley got hit harder than expected. It was a rather freaky turn of events, and as of this writing, the boys from our nation's medicine chest (hey, how about working on a better anti-emetic?) are clinging to faint hopes that they can repel the upstarts from the world's biggest biotech hub, also home of some of the world's leading research on cannabinoid receptor agonists.
In its younger, rasher days, Financings of the Fortnight might have begun to gloat, but there's still more baseball to play. Our foam FOTFingers are crossed. Yes. We. Cain.
Away from the diamond, Aegerion Therapeutics has its fingers crossed, too. Its IPO is scheduled for this week, but as of noon Thursday, no word. If it can't get out, it'll be the firm's third IPO swing and miss. It withdrew efforts in 2007 and 2008, and now it's gunning for a $70 million debut. Its latest terms were 4.67 million shares for sale between $14 and $16 a pop. If it gets out, don't be surprised if executives doff their caps to reveal drastic haircuts.
Seven pure-play biotechs have gone public in the US this year with debuts that have averaged 28% below their original target. Add more discounts post-IPO, as six of the seven are below their debut price. It's not that investors are generally IPO-shy. Overall IPO returns are above 15% so far this year, with average first-day "pops" of 7%, according to Renaissance Capital. Yet there's still no clear path forward for biotech issues.
One biopharma-related firm managed to squeeze through the door this week: ShangPharma, a Chinese CRO whose contracts with GlaxoSmithKline and Eli Lilly account for 37% of its revenues, raised $87 million by selling 5.8 million depository shares and is now listed on the New York Stock Exchange. It priced at $15 a share, within its target range of $14.50 to $16.50.
Our advice to Aegerion as it steps up to the plate: Don't worry about the haircut, or even eine kleine chin musik. But fear the beard. Go Giants! It's another installment of...
Celgene: Celgene's $1.25 billion debt issue closed Oct. 7, and it tells us at least two things. First, the financing, its first big debt raise, cements Celgene as a drug company that can raise a ton of cash in an uncertain economy, something bigger brethren Amgen, Pfizer, Merck and Novartis have done during the financial crisis. If there were any doubts about Celgene in the industry's inner circle, dispel them. (Celgene is also under investigation for improperly fighting generic competition. We told you they're all grown up.) Second, and more interesting to this blog, is the debt issue as a tacit stamp of approval of Celgene's run of growth by acquisition. For many years Celgene shunned dealmaking; not so anymore, as our DOTW colleagues are more than happy to discuss. Celgene's long-term R&D partnership with Agios is certainly going to get some votes for "Deal of the Year." And Celgene seems to get more creative as it goes along; no doubt some of the $1.25 billion raised will go toward transactions. (It just sealed its acquisition of Abraxis BioScience that included cash, stock and -- speaking of creative dealmaking -- a tradable contingent value right coupon.) The Celgene debt is in three tranches: $500 million at 2.45% interest will mature in October 2015 and are priced to yield 2.481% ; $500 million at 3.95% will mature in October with 3.981% yield; and $250 million at 5.7% interest will mature in October 2040 with 5.713% yield. Citigroup, JP Morgan and Morgan Stanley are the underwriters. -- Alex "UUUU-RIBE" LashPearl Therapeutics: South San Francisco-based Pearl Therapeutics, which spun out of Nektar in 2006, announced a monster $69 million Series C on October 19. According to Elsevier’s Strategic Transactions, the financing is the 5th largest private placement this year, outclassed only by by Pacific Biosciences, Archimedes, AiCuris, and Immatics. The money, which comes from Pearl’s existing venture syndicate of Clarus, New Leaf, and 5AM Ventures and includes new investor Vatera Healthcare, will be used to support ongoing clinical trials of the biotech’s PT003, currently in Phase IIb trials for patients with chronic pulmonary obstruction disorder. PT003 is a combination of glycopyrrolate, a long-acting muscarinic antagonist (LAMA), and formoterol, a well-known long-acting β2-agonist (LABA), delivered via a metered dose inhaler (MDI). The drug is being positioned as superior to Boehringer Ingelheim’s Spiriva, the only once daily COPD medicine currently approved in the U.S. which generated over €1 billion in 2009 sales. PT003 will be administered twice daily, but Pearl’s interim CEO Howard Rosen doesn’t think that will curb uptake, especially if the data from ongoing head-to-head trials with Spiriva show superiority. Data will be available by year’s end. Of the backers, Vetara is a relative newbie in the staid, clubby world of venture, founded and funded in 2007 by Michael Jaharis, former co-founder of Kos Pharmaceuticals. Jaharis and his team should provide Pearl valuable commercial advice as the biotech moves PT003 along, having already successfully shephered combo products to market. -- Ellen Foster "Buster" Licking
Synosia Therapeutics: The Swiss biotech's latest round of equity funding coincided with a licensing deal, as Belgian biopharma UCB contributed $20 million of Synosia’s new $30 million Series C round while licensing a pair of Parkinson’s Disease drugs from the startup. Existing investors Versant Ventures, 5AM Ventures, Novo A/S, Aravis Venture, Investor Growth Capital and Swiss Helvetia Fund also participated in the round, which brings Synosia’s total funding to about $90 million. The UCB arrangement also included a non-dilutive upfront payment of undisclosed size, and milestone payments built into the deal could yield up to $725 million. The partnership covers adenosine A2a antagonist SYN-115 and 4-hydroxyphenyl-pyruvate dioxygenase inhibitor SYN-118 for Parkinson’s. Synosia will complete Phase II work on the two drugs on its own before handing them over to UCB for Phase III development and commercialization. The agreement also includes provisions for collaboration on additional drugs originating from either company, at terms to be negotiated in the future. Synosia, which typically obtains compounds abandoned by other pharmas including Roche, also has drugs in its pipeline targeting Alzheimer’s, cocaine dependence and bipolar depression. Aravis and IGC led Synosia’s CHF 32 million ($29 million) Series B round in January 2009. -- Paul "Babe Ross" Bonanos and John "The Count" Davis
Regeneron Pharmaceuticals: The antibody company tapped the public markets for $175 million in an oversubscribed public offering of 5.5 million shares plus 825,000 more for the underwriter, Citi. It's the first follow-on offering for Regeneron since 2006, when it also scooped up $175 million. Meanwhile, the firm secured a steady source of cash by partnering long-term with Sanofi-Aventis, a deal that turns Rengeneron into Sanofi's main source of antibody R&D; the big pharma has options on all molecules from the . The December 2009 extension of their relationship promises Regeneron $160 million a year through 2017, though Sanofi can dial it back to $130 million after 2013. The full skinny on the deal is here. So why the huge injection of dilutive follow-on cash? One answer lies in Regeneron's ambitions. It has programs outside its collaboration with Sanofi, the most advanced being Arcalyst (rilonacept), on the market for the ultra-orphan cryopyrin-associated periodic syndrome (CAPS) and in Phase III for gout. Officials make no bones about their goal of becoming a FIPCO; pushing Arcalyst to market in gout would get them a lot closer. -- A.L.