Friday, December 14, 2012

Financings of the Fortnight Comes Bearing Gifts

This will be the final FOTF of the year, so we’d like to take a moment to wish everyone warm, peaceful and happy winter solstice holidays, no matter which festivities you celebrate. 

We're grateful for your readership, and if there's anything you'd like us to do differently in 2013, or if you just want to wish us a Merry Hannukwanzamas, we're all ears. You can always leave comments below, or more privately, send an email to a - dot - lash at elsevier dot you know the rest. (No happy holidays for you, spambots!) We're also grateful this week to Sten Stovall, European bureau chief, for his help with the column.

In Europe, holiday lights in biotech circles should burn brighter with the news that Sofinnova Partners, based in Paris, has raised $312 million for a new life science fund, tapping almost exclusively into European sources. The venture capital group began life in 1989 and is now on its seventh fund. It raised the money from LPs including insurance companies, pension funds, fund-of-funds, financial institutions and high net worth private individuals, 90% of which are based in Europe (including 22% from France).

That’s a big shift, Sofinnova founder and managing partner Denis Lucquin tells FOTF: “Ten years ago 50 percent of our financial means came from the US. This time, we didn’t have any. They’re too nervous about the situation in Europe and the Eurozone, and they just don’t have the confidence to put money into Europe.”

Its previous fund closed in 2009 with $370 million committed, so willfully or not, the group has scaled back a bit. (Sofinnova Partners is not to be confused with the US-based Sofinnova Ventures, which closed a new $440 million fund in late 2011.)

No matter where they’re located, investors are nervous about early stage life sciences, but Sofinnova Partners made a contrarian pitch: Sofinnova Capital VII fund will be invested in early-stage life science companies, with about two-thirds going into Europe and one-third into the US. The fund will target biopharmaceuticals, devices and industrial biotechnology. As part of the comprehensive coverage of biotech crossover investment in the November START-UP, we heard from VCs, under pressure from impatient limited partners, who are looking to public investments for faster exits. “One of the ways to compress the timelines is through participating in public financings,” Sofinnova Ventures’ Jim Healy told our colleague Stacy Lawrence.

If Lucquin is feeling similar pressure, he’s not letting on: “We will eventually exit these investments by either selling them to big corporations or by floating them on a stock market. We usually do that after five to six years, on average, but sometimes it takes a bit longer.”

Then again, the firm’s recent track record gives its partners some breathing room. The latest fundraising follows a three-year period in which Sofinnova completed the trade-sale of portfolio companies Corevalve, to Medtronic Inc. for up to $850 million; Novexel SA to AstraZeneca for up to $505 million; Movetis to Shire PLC for €428 million; Fovea to Sanofi for up to €370 million; and PregLem SA  to Gideon Richter for up to CHF445 million. Portfolio firms Stentys and DBV also went public on the Paris Euronext stock market. For all those, says Lucquin, Sofinnova had been the initial and largest investor from start to exit, representing a total enterprise value (stock market capitalization plus debt) of $3.6 billion.

That's a lot of stocking stuffers. If you know a FOTFhead who's not a START-UP subscriber, by the way, don't forget magazine subscriptions always make a lovely present. In fact, the START-UP elves are busy right now in their secure undisclosed sweatshop working on the 2012 A-List, in which we not only break down the year's Series A investment activity, but ask the question What does it all mean? All we can tell you now is that, yes, Virginia, there really is a Père Noël, as the Parisian Sofinnovians would say. And there really are Series A biotech investors despite the early-stage aversion you hear so much about.

Leave some cookies and a glass of milk, put out the fire in the fireplace, and, if you can, clean the soot out of your chimney, 'cause whether you've been naughty or nice, here comes...

Amarin Corporation: Cardiovascular drug developer Amarin is getting ready to launch its FDA-approved fish oil pill Vascepa (icosapent ethyl), and it’s got $100 million in fresh cash to go it alone. The Dublin, Ireland firm said December 6 it raised the non-dilutive capital through Pharmakon Advisors, calling it a “hybrid debt-like instrument.” The funding will allow Amarin to hire 250 to 300 salespeople for an early 2013 launch. Vascepa was approved in July. The delay has raised questions about Vascepa’s future. CEO Joseph Zakrzewski said on a conference call that Amarin will continue discussions with potential acquirers and partners. But absent a deal, the company will prepare to market the primary-care drug itself, an enormous challenge for a small organization that has no other marketed products, lacks revenue, and had just 31 employees at the end of 2011. Approved for patients with very high triglycerides, Vascepa will enter a market against a variety of competitors. Most prominent is the blockbuster Lovaza (omega-3-acid ethyl esters), sold by Pronova BioPharma ASA and GlaxoSmithKline PLC and known as Omacor in Europe. A generic version of that drug will be sold in the US by Apotex beginning in 2015. Vascepa is thought to have an advantage over some competitors, in that it does not contain docosahexaenoic acid (DHA) and thus does not raise LDL cholesterol. Amarin shares nearly doubled in value in April 2011, when it reported Phase III data showing that Vascepa lowered LDL cholesterol, but as IP issues and muddy launch plans weighed on the shares, they lost those gains within six months. Its share price was hammered again on the financing news and as of the closing bell December 12 was down 21%. The new debt vehicle can be paid back via a series of small installments until November 2013, at which point payments will increase until 2017. Zakrzewski said the payments are tied to Amarin’s revenue forecasts, and are capped if sales are less than expected – Paul Bonanos

Moderna Therapeutics: The developer of messenger RNA therapeutics emerged from incubation with the announcement of a $40 million financing on December 6. Flagship Ventures is leading the financing joined by what Moderna CEO Stephane Bancel called “high net worth individuals interested in going after very disruptive innovation.” Moderna is adapting research by Harvard University’s Derrick Rossi and Ken Chien and Massachusetts Institute of Technology’s Robert Langer to create treatments that aim to let the human body restart or increase the production of naturally occurring therapeutic proteins inside their own cells without triggering an innate immune response. The company was founded in October 2011, and by June 2012, Moderna was conducting preclinical studies of two drugs in primates. “In the body, we have a huge number of secreted proteins,” Bancel told our “Pink Sheet” colleagues. “What we have demonstrated in the serum, across several drugs and several animals, is that we are able to inject by intramuscular or subcutaneous [administration] and around the injection site get the body’s cells to uptake the RNA, make the proteins of interest and then secrete them to the bloodstream. It’s a very novel way of thinking about drugs.” The $40 million will be used to demonstrate safety with a goal of advancing two drugs in undisclosed indications into Phase I, he added. Moderna emerges from the Flagship Venture Labs think tank and incubator, which earlier this year launched microbiome-focused Seres Health. The new company's board will be chaired by Flagship co-founder Noubar Afeyan. The plan is to develop, make and sell mRNA drugs for rare diseases in-house while partnering out opportunities in larger patient populations. The firm thinks its technology offers significant promise in cardiology and oncology because of its ability to penetrate specified cells and trigger the production of proteins in those cells, but not outside of them. – Joseph A. Haas

ArmaGen Technologies: The Santa Monica, Calif. start-up said November 29 it has secured a $17 million Series A from an unusual syndicate: Three pharma corporate venture groups and the finance arm of a Japanese conglomerate. Corporate venture has played an increasing role in biotech funding, reaching down into early rounds more often in the past couple years, but a Series A exclusively from corporate is still rare. Boehringer Ingelheim Venture Fund is the lead investor, with participation from Shire, Takeda Ventures, and Mitsui & Co. Global Investment. What’s caught their attention is ArmaGen’s recombinant protein technology to create drugs that penetrate the blood-brain barrier. The near-term goal is to go after rare CNS diseases such as Mucopolysaccharidosis (MPS) Type I (Hurler's syndrome) and MPS Type II (Hunter's disease). Both BI and Shire’s funds are relative newcomers to the venture scene. When it launched in 2010, BI’s fund director anticipated about three deals a year, a push for board seats – which it has with ArmaGen – and made clear a goal of eventually partnering or acquiring the investee. Shire unveiled its investment group in September 2010 and has been aggressive; we counted at least eight investments since its debut. ArmaGen is run by UCLA endocrinologist William Pardridge, who spun it out of his lab in 2004. Until now he has raised government and military grants, but no venture financing. ArmaGen’s “Trojan Horse” technology creates fusion proteins that both bind to blood-brain-barrier receptors to sneak through, and bind to targets once inside the brain. – Alex Lash
Flexion Therapeutics: When its founders created Flexion in 2007, they didn’t plan on pursuing late-stage drug development. Times have changed. The company said December 4 it raised $20 million in a Series B funding earmarked in part for a Phase III trial of an osteoarthritis compound. It’s a significant shift away from the company’s original goal. The founders, former Eli Lilly executives who pioneered Lilly’s Chorus program, intended for Flexion to acquire compounds that pharmas were neglecting, develop them through Phase II, and strike partnerships with pharmas for late-stage trials. But partnering terms have proven onerous in the general market, even for drugs that have displayed promise in Phase II data, Flexion CEO Michael Clayman told “The Pink Sheet” DAILY. Novo Ventures partner Heath Lukatch said the company might even attempt to support development of a product through NDA registration. For now, Flexion has cash to sustain itself through 2013. First-time backer Novo Ventures led the new round, which also included returning investors 5AM Ventures, Pfizer Venture Investments, Sofinnova Partners and original seed investor Versant Ventures. The syndicate supplied $55 million in Series A funding, spread out over three closings between 2009 and early 2012. Based in Woburn, Mass., Flexion’s primary focus is on FX-006 and FX-005, a pair of osteoarthritis drugs. FX-006 is a sustained-release reformulation of a steroid that can be injected directly into a joint, and is a potential first-line therapy.  – P.B.
The Best of the Rest: A $50 million Series D investment for 23andMe, led by the king of late-stage social-media investments Yuri Milner, will let the company reduce the cost of its personal genome service to $99… Led by Flemish investment firm PMV, Biocartis raised €34.5 million in its Series D… Infinity Pharmaceuticals raised $150 million in a secondary offering… Zafgen closed a $21 million Series D round to support Phase II trials for obesity candidate beloranib… Rare disease start-up River Vision Development also completed a $17 million A round involving corporate backers… New investors Morgan Stanley and AllianceBernstein joined NanoString’s $15.3 million Series E… After raising an initial $15 million in December 2011, Cerulean Pharma reportedly added $13 million to its Series D… Working on a cloud application for electronic medical records, Modernizing Medicine closed a $12 million placementGalera Therapeutics grossed $11 million in a Series A co-led by NEA and Novartis Venture FundAvelas Biosciences’ real-time metastatic node visualization tools will get funded via the company’s $7.65 million A round… New investor Astellas Venture Management joined the syndicate for Bicycle Therapeutics’ £3.75 million Series A… Biomatrica raised $5 million to back its SampleMatrix technology for ambient biological sample storage… To help complete Phase III trials for Parkinson’s agent pimavanserin, Acadia Pharmaceuticals grossed $86 million in a private placement… Cel-Sci is using a $10.5 million RDO for Phase III studies of Multikine for head and neck cancer… Applied DNA Sciences raised $7.5 million from institutional investor Crede CG II… Israeli biotech Redhill Biopharma completed a $6.5 million financing… Developer of inhaled respiratory therapeutics Aradigm grossed $6 million in a PIPE… CNS-focused Supernus publicly raised $48 millionAcelRx completed a $41.4 million FOPO to support acute and breakthrough pain projects… To help pay for Phase II trials of diabetic foot ulcer candidate DSC127, Derma Sciences grossed $31.7 million in its follow-on… Pain drug developer Durect’s follow-on resulted in $12.6 million… Cancer immunotherapeutics company Northwest Biotherapeutics closed a $12 million public offeringNovaBay raised $7.4 million publicly for its anti-infectives work… As it prepares for Phase II of its oral insulin capsule, Oramed Pharma completed a $5 million FOPO… and Arrowhead Research publicly sold $4.1 million in stock for its peptide drug conjugate platform.  – Amanda Micklus

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