Thursday, December 16, 2010

Financings of the Fortnight Enjoys An Early Noel

For many of us, Christmas (or Hanukkah) arrived early this year. Fans of the Philadelphia Phillies, for example, found a stocking full of Cliff Lee, giving the team a formidable rotation that apparently only the San Francisco Giants can beat consistently. Twitter pulled the ribbon off a $200 million gift box from VCs including blue-chip Valley firm Kleiner Perkins Caufield & Byers.

And across the pond in the UK, where the name Cliff Lee prompts about as much recognition as Ashley Cole’s does in the States, the British biotech sector got its early gift: a £140 million ($220 million) equity raise for Imperial Innovations Group plc, the tech transfer-focused firm closely tied to Imperial College London, foretelling dozens of new investments in academic spinouts.

Wrapped into Imperial Innovations' new funding is the news that it will focus increasingly on commercializing other institutions' research, while continuing to fund ICL spinouts. The firm will collaborate with Cambridge Enterprise, Oxford Spin-Out Equity Management, and UCL Business, the tech transfer groups associated with University College London and the Universities of Oxford and Cambridge. ICL-related investments will still account for the biggest share, with about 40% of the new funds slated for those spinouts; the firm and the university have an ongoing 15-year pipeline agreement that runs through 2020.

The deal will accelerate the firm's pace of investment to as much as £60 million annually from a current pace of £14-£15 million each year, according to CEO Susan Searle. Founded in 2006, Imperial Innovations has invested £47.9 million since its 2006 IPO. It plays a hands-on role in 31 of its 79 portfolio companies, often investing alongside traditional VCs. It reaped a £9.5 million cash exit from the £73 million sale in June of small-molecule drug discovery startup Respivert to J&J's Centocor Ortho Biotech division this year, and could gain as much as £16.1 million from a back-loaded payout from Wyeth's acquisition of obesity drug maker Thiakis.

Imperial Innovations' public placement, relatively rare in 2010, included a rights issue and three installments of convertible shares. J.P. Morgan Cazenove underwrote the issue.

Though VCs have shied from academic deals of late, even deriding them as "science projects" as they've shifted focus, it's been a strong season for investment in university research. On the Big Pharma side, Pfizer's headlong charge into academic dealmaking produced an $85 million commitment to UCSF this fall, one of several on-campus deals the company plans to make.

Whether you're the type to open presents on Christmas Eve or Christmas morning, Imperial Innovations isn't the only one who's already enjoying a gift this season. Since it stands to reason that Santa's sleigh travels from east to west, we'll first linger in Europe as we present...

ThromboGenics: The one-horse open sleigh has already made pitstops in several European countries, rewarding Belgium's ThromboGenics with the most loot. Planning to go it alone with the anticipated launch of microplasmin for retinal disorders, ThromboGenics raised €56 million (about $75 million) in a private investment in public equity financing announced Dec. 2. The deal was one of three PIPEs completed by European biopharmaceutical companies during recent weeks – in addition, Medivir AB raised SEK 280 million (about $41 million) Dec. 3 by selling 2.25 million class B shares of stock at a price of SEK 125 to more than 30 international institutional investors and certified investors in Sweden, while Bavarian Nordic A/S brought in DKK 205 million (about $36.8 million) Nov. 30 by selling 1.05 million shares at DKK 195 apiece. ThromboGenics’ private placement nearly doubled its cash on hand, reported as €59.1 million at the end of the third quarter. The company, which placed 2,944,523 new shares (about 9.9% of outstanding shares) to domestic and international buyers, including qualified U.S. institutional investors, set its price at €19, a 3% discount from the previous day’s closing price. Microplasmin has completed a pair of Phase III trials in varying retinal disorders, including focal vitreomacular adhesion, with a single injection resolving such adhesions in about 30% of patients. Regulatory filings in the U.S. and EU are anticipated in mid-2011. -- Joseph Haas

Sequenta: Geneva's Index Ventures is feeling jolly about diagnostics, and the allure of Sequenta's adaptive immune system response monitoring technology was like milk and cookies waiting for Santa. The California-based company raised $13 million on Dec. 8 in a Series B that also included prior investor Mohr Davidow Ventures, which supported Sequenta in its $2 million Series A. For Index, it's the second time it has backed Sequenta's management team; the same entrepreneurs founded SNP-discovery focused ParAllele Bioscience, which was acquired by Affymatrix in 2005. The firm also has a stake in microfuidics-based assay company SpinX, based in Switzerland. "We're getting into the diagnostics space more and more," enthused UK-based partner Francesco de Rubertis. "It's because of what's happening in pharma: the one-size-fits-all model very clearly is becoming problematic." While diagnostics has long provided the answer to this in theory, in practice, it's been a slower ride, and de Rubertis acknowledged that the best model hasn't yet been found. He added that Index is planning more European diagnostics investments, which will likely be earlier-stage deals. -- Melanie Senior

Catabasis: A lump of coal if you’re naughty, a stocking stuffer if you’re nice, and a second tranche of funding if you meet your milestone. Four VC firms dressed as Santa swooped down the chimney a couple of weeks early with $14.5 million in fresh cash for Catabasis, a diabetes and inflammation startup on the rise whose name nonetheless refers to a descent or sinking. The new money builds on a $7.7 million installment of Series A capital revealed in April, but the round is a gift that’s supposed to keep on giving: The $22.2 million received so far could grow to $39.7 million if additional milestones are met, with SV Life Sciences, Clarus Ventures, MedImmune Ventures and Advanced Technology Ventures standing in for Kris Kringle. Catabasis, which is exploring the connection between inflammation and metabolic disease, expects next year to begin Phase I trials on a drug that combines Omega-3 compound DHA with a salicylate derivative that improves glucose homeostasis in type 2 diabetes patients. After all the cookies and milk, perhaps it's the perfect present for man, dressed all in fur. Nor was Catabasis the only one topping up--and we're not talking eggnog either. Since the last edition of Financings of the Fortnight, Santa's elves have visited Histogen, a San Diego regenerative medicine startup that added $5.35 million to complete its $10 million Series A round, and PhaseBio Pharmaceuticals, which took in the last $15 million of its $25 million Series B to support Phase I trials on the diabetes drug Glymera. -- PB

Geron: Finally, it won't be a blue Christmas for Geron, which netted $93.5 million in a follow-on public offering intended to shore up its balance sheet for multiple projects, including a new licensing deal with AngioChem. The cancer and degenerative disease specialist wasn't necessarily strapped -- it had $125.6 million in cash and short-term investments as of September 30. But Geron owed a $7.5 million upfront payment to AngioChem, and it's on the hook for all further development of the Phase II compound on which the deal centered, a taxane derivative that uses a peptide mechanism to cross the blood-brain barrier and treat brain metastases and glioblastoma. Geron will also conduct Phase II trials on a telomerase inhibitor, which blocks an enzyme thought to be crucial for cell stability and replication in breast and lung tumors, and early-stage clinical trials on a human embryonic stem cell treatment for spinal cord injuries. Geron priced about 17.4 million shares at $5 apiece to raise the first $87 million, while lead underwriters J.P. Morgan Securities and Lazard Capital Markets pursued a greenshoe option that accounted for the remainder. -- PB

image from Flickr user mchristianphotos used under a creative commons license

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