2011 Exit/Financing of the Year Nominee: Ascletis

It's time for the IN VIVO Blog's Fourth Annual Deal of the Year! competition. This year we're once again presenting awards in three categories to highlight the most interesting and creative deal making solutions of the year. The categories are: M&A Deal of the Year, Alliance Deal of the Year, and Exit/Financing Deal of the Year. We'll supply the nominations (a half 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™.

Emerging biotech Ascletis Inc. is embarked on a truly ambitious attempt to create a trans-global pharma company and, in doing so, has raised one of the largest Series A rounds ever in biopharma -- $50 million in the first tranche, with another $50 million guaranteed to follow when the company hits certain milestones. Based on those achievements alone, Ascletis surely qualifies as a top-gun deal-maker of 2011.

The money speaks for itself—only 10% of 2011’s year-to-date Series As raised more than $40 million—and of those, only one other, Hua Medicine, also a Chinese biopharma, raised $50 million.

Asceltis’ round was the largest by far but the company is distinct in other ways that enable it to creatively exploit a host of industry-wide trends. Its strategy is to search globally for appropriate clinical-stage in-licensing candidates, which it can develop and eventually commercialize in China. It also plans to discover new drugs internally and bring them through mid-stage trials before seeking global partners for large-stage development and commercialization.

The aim, it says, is creation of a true hybrid model, poised, on the one hand, to capitalize on the innovation and strategic expertise of Western trained executives and scientists and, on the other hand, China’s capital efficiencies and opportunities for accelerated research. To drive its point, Ascletis recently broke ground on a new China headquarters and R&D center in the Zhenjiang Province in China and is planning a U.S. headquarters in Research Triangle Park, NC.

With la creme de la creme Western-trained management talent moving to China, more opportunities for savvy in-licensing deals exist there. The therapeutic areas of interest are oncology and infectious diseases, reflecting the expertise of its co-founders and scientific advisors, Jinzi Wu, a former VP, global HIV drug discovery at GlaxoSmithKline, Xiao-fan Wang, a professor of cancer biology at Duke University Medical Center, and Allan Baxter, former global head of medicines development at GSK.

And the financial largesse stems from the generosity of one angel investor, real estate billionaire Jinxing Qi, with additional commitments from unnamed private investors in the U.S. and China and elsewhere. That in itself is a trend, as angel investors, stepping in seem likely to be playing increasing, albeit limited, roles in early-stage biotech financing. And, of course, China itself is a massive commercial opportunity for the right talent, with a CAGR of 17% estimated between 2011 and 2015, according to IMS Health, which predicts China will be the world's second largest pharma market by 2016, up from No. 3 in 2010.

Of course, finding solid development stage assets is a hurdle, even for large, deep-pocketed companies. And the hybrid U.S.-China combined development strategy didn’t pan out for some earlier companies. But Ascletis, by dint of its multi-faceted strategy, highly experienced, globally-oriented management team, and angel-backed financial cushion, is de-risked more than most, even as it positions itself to benefit from one of the industry’s biggest current opportunities. A deal-maker of this caliber surely deserves Deal Of The Year recognition.