These Days, You Can't Spell Financings Of The Fortnight Without "I-P-O"

It turns out a lot of the words that contain the letters "IPO" are biomedical words:

Pluripotent. Liposomal. Adiposis. Gallipot.

And it turns out a lot of biomedical companies have IPO in them, too. Since we last met 14 days ago, dear reader, a stunning 13 biotechs have made their public debuts, although if not for Eleven Biotherapeutics, it would have been 12.

There are all kinds of ways to slice and dice this baker's dozen; one way is to look at first-day pops. Indeed, our colleagues at "The Pink Sheet" will soon have a detailed look at the crazy first-day run-up of RNAi developer Dicerna Therapeutics; the 207% gain was the biggest in biotech since Antigenics jumped 241% in February 2000, according to Renaissance Capital.  (More on Dicerna's IPO in the roundup below.)

But with the momentum that began in earnest last spring showing no signs of tapering off, we're curious about a different indicator: insider purchases. As soon as IPOs began to rebound from the financial crisis, insiders often did heavy lifting to get the deals off the ground.

But those levels began to decline in 2013, as Atlas Venture partner Bruce Booth noted on his blog last fall. He also noted that insider participation could signal a cooling of the market. Well, yes, but as we noted on this blog in early 2012, it's hard to draw conclusions about deal-by-deal participation. Is heavy insider presence a sign of desperation to get a deal done, or is it a sign of singular enthusiasm? With crossover investors already on the cap table and wanting more at IPO, and with some VCs playing more frequently on the public side of the fence, it can be hard to tell. What's more, SEC filings don't always divulge the true level of insider participation.
 
With all that, let's round up what this year's IPOs have revealed:

Here are the 13 IPOs the past two weeks, plus GlycoMimetics on January 9, and the percentage of insider participation noted in the regulatory filings:

Company Name	Insider Participation at IPO
Dicerna	57%
GlycoMimetics	29%
Celladon	25%
Eleven	24%
Trevena	23%
uniQure	22%
Genocea	21%
Egalet	20%
Auspex	12%
Cara	7%
Ultragenyx	0%
Acucela	0%
Revance	0%
Biocept	0%

That's an average of 16% raised from insiders, but with caveats: some of these numbers (highlighted green) are based on filings which note that insiders indicated an interest of purchasing a certain amount. At the time of this writing, it's not clear whether they actually pulled the trigger, but often those indications don't change much. Other caveat: The percentages don't factor in the green shoe. In other words, some of the numbers you see above will change as more information emerges.

For what it's worth, our own IPO data show insider participation in 2013 averaged 14%. 

It's hard to say what all this means. Two years ago, when insiders shouldered heavy IPO loads -- taking on more risk instead of getting to precious exits -- it was easier to wonder about the desperation of it all. But now, more early stage biopharma investors (Third Rock Ventures, Flagship Ventures, OrbiMed Advisors, 5am Ventures and so on) are squaring the circle, from fundraising to new investment to IPO and back again, and biotech's boom means those extra IPO shares, if you can afford them, could be a lucrative proposition. And as our START-UP colleagues noted last year, biotech VCs haven't been shy about holding... and holding... and holding their shares well past IPO.

Is it worth mentioning that you also can't spell "ripoff" without IPO? Or perhaps we should leave you with this lighter linguistic play: The only anagram of IPO is "poi." A select few find the ancient Hawaiian staple of taro root mush delicious, but other people just need some time to appreciate it. Hmm, sounds like a recipe for what we cook up every two weeks, except we call it...

Dicerna Pharmaceuticals: RNA interference specialist Dicerna more than tripled in its first day of trading, making it the largest post-IPO pop since 2000. Demand for the offering was almost unprecedented with over $1 billion in orders, thanks in part to the RNAi-validating $700 million deal between Alnylam Pharmaceuticals and Sanofi's Genzyme that stole the show at January’s JP Morgan Healthcare conference. But unlike many IPO candidates going into 2014, Dicerna can't count on near-term milestones to support the stock. It expects to start clinical trials for the treatment of primary hyperoxaluria in 2015, with proof-of-concept data due later that year. It also expects to advance DCR-M1711 for cancers driven by the MYC oncogene in the first half of 2014, with proof-of-concept data in 2015. The biotech originally targeted $60 million, but by increasing its price to $15 and shares sold to six million, it ended up raising $90 million. The overallotment could add another $13.5 million. Last July, Dicerna raised a $60 million Series C round at $7 a share with crossover investors RA Capital, Deerfield Management and Brookside Capital Partners, as well as VCs Domain Associates, Skyline Venture Partners, Abingworth Bioventure, SROne and Oxford Biosciences Partners. At market close on February 6, Dicerna’s share price had settled to $33.98, down from its first-day high of $46, but still more than double the IPO offer price.  – Stacy Lawrence

uniQure: The groundbreaking Dutch company gained the first regulatory approval for a gene therapy in the Western world, but it isn’t the first to go public. The company followed bluebird bio and, just by a few days, Celladon into the public markets with its February 4 listing on the Nasdaq, pricing 5.4 million shares at $17 apiece, above the anticipated range of $13 to $15. uniQure netted $81.9 million in the transaction, net of discounts and expenses; a greenshoe option could add $13.8 million more to the offering’s value. uniQure made history in November 2012, when EMA approved its Glybera (alipogene tiparvovec) to treat rare metabolic disease lipoprotein lipase deficiency. It’s part of a renaissance of interest in the field of gene therapy, once considered overly risky, and VCs have stepped up investment in new treatments in the field. After meeting with US regulators, uniQure plans to file an IND for Glybera by midyear. The company will also use its IPO proceeds to complete its Lexington, Mass. manufacturing facility and advance pipeline candidates including Phase I/II hemophilia treatment AMT-060. The company is planning a 2014 commercial launch of Glybera in Europe, in conjunction with regional partner Chiesi Farmaceutici. – Paul Bonanos

Lumos Pharma: Two years after paying $695 for a crowdsourced logo, Lumos has reeled in real cash: a $14 million Series A round led by Sante Ventures and New Enterprise Associates. The Austin, Texas firm is working on a small molecule therapeutic for the rare disease Creatine Transporter Deficiency (CTD), which is in preclinical studies. Lumos was among the first companies to gain support from the National Institutes of Health's "TRND" program, or Treatments for Rare and Neglected Diseases. As our sister publication START-UP noted in late 2011, CEO Rick Hawkins, a serial biotech entrepreneur, turned to TRND for help in what he called the worst disruption in the capital markets he'd seen in 35 years. CTD is an inborn error of metabolism that results in a profound lack of creatine in the brain. It's an x-linked disorder, which means boys are more affected than girls, with severe autism-spectrum symptoms such as language and speech delay, epilepsy and destructive behavior. Lumos is repurposing a drug -- what it calls a kinetically similar analog of creatine -- previously studied as a solid tumor treatment, and tested in knockout mice at the University of Cincinnati. Kevin Lalande, Managing Director of Sante Ventures, and NEA Partner Ed Mathers will join the Lumos board. – Alex Lash

NightstaRx: We admit we first thought about writing up NightstaRx to poke gentle fun at its name. (It apparently is pronounced "Nightstar," which makes for the first silent "X" in the English language.) But we would never be that shallow; the firm merits a write-up for other, more legitimate reasons. First, the company is the initial therapeutic investment from Syncona Partners, the new £200 million ($325 million) evergreen venture fund of the mighty Wellcome Trust, which has been rather slow to get cranking (it was first announced nearly two years ago). Once known as Project Sigma, Syncona aims to fund private biotechs and keep full ownership, at least for a while. It's for-profit and although fully funded by Wellcome, it's separate from the Trust's investment division, which has billions of pounds of private equity holdings. Now that Syncona is truly up and running, it should b be a significant source of early stage funding for European biotechs. Our second reason to highlight NightstaRx, a spinout from the University of Oxford, is that Syncona's £12 million ($20 million) will help move forward a gene therapy treatment for choroideremia, an inherited form of progressive blindness. It's the latest entry in a venture-backed field of ocular gene therapy companies, as The treatment uses a small modified virus, AAV.REP1, to deliver the correct version of the mutated gene that causes to cells in the retina of the eye. Six months after treatment with this therapy, the first six patients showed improvement in their vision in dim light and two of the six were able to read more lines on the eye chart, according to a January 16 paper in the British medical journal Lancet. The vector is currently in Phase I trials and follow-on tests are expected to begin in 2016. – Sten Stovall and Alex Lash

Best of the Rest (Highlights of Other Activity This Fortnight): Cancer MAb company Igenica announced a second closing of $14 million to its June 2012 Series C round, raising the total proceeds to $47 million…In another add-on, Sialix, which is focused on sialic acids to treat cancer and inflammatory-mediated diseases, tapped angel investors to supplement its August 2011 Series B financing with a $1.2 million tranche, bringing the round total to $4 million…Through a public offering, renal drug developer Keryx Biopharmaceuticals netted $108.2 million (including the overallotment)… Large FOPOs were also completed by other cancer-focused biotechs: Geron ($97.3 million) and Tesaro ($94.8 million)… While numerous initial public offerings were completed, there are still an abundance of filers in the wings, hoping to go public soon; among them is UK biotech Circassia, intending to float on the London Stock Exchange's Main Market, which, if successful, would be the first UK-market IPO since Clinigen Group’s £6.6 million flotation on AIM in October 2012 (UK biotech Egalet just completed its $50 million IPO, but on Nasdaq)… Canadian spec pharma Aptalis Holdings withdrew its December 2013 IPO filing on Nasdaq in favor of a $2.9 billion buy-out by Forest Laboratories… Through the sale of debt, Emergent BioSolutions raised $250 million to fund its acquisition of Cangene… Also through a debt offering, Fluidigm brought in $170 million to finance its takeover of DVS Sciences. – Maureen Riordan

Many thanqkxs to Mr. Thomas for the Scrabble photo via a Creative Commons license.

Financing of the Fortnight Wonders If It's Time To Join The Parade

Biotech workers of the world unite, you have nothing to exercise but your stock options. At least a few more do these days. We’re far from the cries of “Mayday!” that echoed from the bottom of the financial canyon four years ago, and as we write this, the sector is abuzz with IPO pipeline activity.

GW Pharmaceuticals, a British purveyor of pain-relieving cannabinoid drugs already listed on the AIM, just raised $31 million and made its Nasdaq debut; and Insys Therapeutics, also in the prescription pain-relief business, raised $32 million in its IPO.

Both were modest, as are most dollars raised in biotech IPOs. But they’re the eighth and ninth of the year already. To relieve investors with grumpy LPs and give workers hope that stock options will one day put a little extra scratch in their pockets, it’s volume that’s needed. More liquidity across the board, please.

It seems the waters are about to flow. Ambit Biosciences, Regado Biosciences, Receptos, Epizyme, Portola Pharmaceuticals, and others are now in the queue, along with the mega-CRO Quintiles Transnational Holdings (with private equity, not venture capital, backers). We won’t make individual assessments of the worthiness of each company at this point, but on the whole it’s a well represented group.

Those are just the ones in the public eye. There could be plenty a few steps behind, thanks to the US JOBS Act of 2012. It made IPO registration easier and stealthier at first, giving companies the chance to lay the groundwork of a possible debut without having to open up to public scrutiny. Not so fun for journalists, of course, but it gives executives and their advisors more data to consider and more time to schmooze public investors before declaring themselves in pursuit of the brass ring. And that breathing room, people say, is helping. “The ability to make initial registration statement filings confidential, plus the ‘testing the waters’ rules have made a meaningful difference in helping companies pursue an IPO,” says Fenwick & West partner Matt Rossiter, whose clients include life science companies and venture investors.
  
Kleanthis Xanthopoulos took his microRNA company Regulus Therapeutics public last year and is a big believer in a long, slow IPO process. “The roadshow should be where people make their minds up, finally, rather than where they learn about you,” he said during a discussion about the IPO landscape at the recent Allicense conference in San Francisco.

The biotech analysts at Cowen & Co. agree that the JOBS Act, by allowing more investor exposure to pre-IPO companies, has increased investor comfort. Other factors besides the new rules are helping, too. Since 2004 there have been 332 biopharma acquisitions and 119 IPOs, they say, which leaves public investors hungry for new investments and new ideas. And the past couple years, IPO investments have on average outperformed the S&P 500. (A couple months ago, our friends at “The Pink Sheet” took a detailed look at the strong Class of 2012 here.)

“It seems quite reasonable that these factors have come together to produce a market more receptive to IPOs than at any point in the previous 5 to 10 years," write the Cowen team in a recent sector report.

Yes, but… (You knew that was coming.) If public investors are showing more interest, why is insider participation in IPOs so high? It’s a phenomenon we’ve tracked for a while now. A year ago it was startling. At his Allicense talk, Xanthopoulos cited data from Lazard Equity Capital Markets and FactSet that show why: For this current IPO window that began in late 2009, 71% of offerings have included insiders, and the median amount of proceeds they’ve bought at IPO is 43%. In the previous window, from 2003-2007, insiders participated in 29% of offerings and snapped up 20% of the proceeds.

Quite a bump. What gives? A small part of the bloated totals could be due to the crossover phenomenon, with hedge funds and other public buyers getting in before the IPO and bolstering their positions at the debut. And on any particular deal you might find an insider or two who are simply thrilled with the company, hungry for more, and in no rush to exit. But with so many firms out fundraising, or winding down operations, most of those insiders are wading in deeper simply to get deals done.

So keep an eye on those insider numbers. If IPO volume continues apace, and the insiders start to do what they really want to do -- own less stock, not more, after their companies go public -- we'll know the window is wide open.

In fact, May is the perfect time to throw windows open, let in the breeze, and do some housecleaning. We'll start right now by polishing up the latest edition of...

Symphogen: The privately held Danish antibody company said May 3 it has reeled in another €41 million ($53.9 million) to push forward its antibody mixture pipeline. The firm is developing products that contain more than one full-length monoclonal antibody, an approach that few companies have tried. As described in a START-UP feature earlier this year, Symphogen has pioneered the way for antibody mixtures (or combinations, or cocktails, as some might call them) into the clinic, and in 2012, it outlicensed its lead oncology program, a two-antibody mixture to treat head and neck and colon cancers, to Merck Serono following Phase II trials. The cash from that deal, plus its massive €100 million financing round announced in 2011, and the new funds, an extension of that round, has given the firm a long runway to develop its preclinical pipeline. Its lead program is now Sym013, a six-antibody mixture designed to inhibit HER1 (aka EGFR), HER2 and HER3 to prevent tumors from switching signaling pathways and building drug resistance. Ultimately the company wants to design combinations of antibodies that hit targets not just on the tumor cell surface but in the surrounding microenvironment.  The extension was led by existing investors Novo A/S and PKA, a Danish pension fund administrator, and included Danica Pension, making its first active investment in Symphogen. Symphogen has now raised €249 million in private capital. -- Alex Lash

ScioDerm: Dermatology start-up ScioDerm has raised the first $9 million of a planned $16 million Series A round, intended primarily to support clinical trials on lead program SD-101. The Raleigh, N.C., start-up’s backers were Morgenthaler Ventures and Technology Partners, which made us do a slight double take. Turns out Morgenthaler’s life sciences team is still investing the firm’s 2008-vintage ninth fund, even though the group has already joined forces with Advanced Technology Ventures’ biotech team to create a new firm, Lightstone Ventures. Morgenthaler is not expected to make new life sciences investments from future funds. In February, ScioDerm filed an IND to study SD-101 in epidermolysis bullosa, a rare genetic disorder that results in sensitive and fragile skin, disfigurement due to wounds from blistering and tearing, and early death. It had previously conducted a Phase II study of SD-101 in some subtypes, including the simplex, recessive dystrophic, and junctional forms of the disease. Also this fortnight, ScioDerm received Breakthrough Therapy designation from FDA, potentially speeding the drug’s clinical development. A Phase I study is expected soon, with a Phase IIb/III study expected as soon as late 2013. – Paul Bonanos

Esperion Therapeutics: Longitude Capital joined a roster of investors in cholesterol-fighting drug developer Esperion, leading a $33 million Series A extension that builds on $22.75 million the company raised in 2008. Returning backers included Aisling Capital, Alta Partners, Domain Associates, Arboretum Ventures and Asset Management. Esperion is attempting to grab a piece of the market for cholesterol-lowering prescription drugs that appeal to patients who cannot or prefer not to take statins such as former Pfizer blockbuster Lipitor (atorvastatin), generic since November 2011. The company recently presented encouraging data suggesting that Phase II candidate ESP-1002 reduced low-density lipoprotein cholesterol by more than 40% in type 2 diabetes patients; it’s studying the drug in additional patient populations as well. By some estimates, a fifth of high-cholesterol patients are statin-intolerant, suffering pain or muscle weakness. Other novel drug classes, such as PCSK9 inhibitors, are being studied for statin-intolerant patients, but Esperion co-founder Roger Newton – a co-discoverer of Lipitor – said ESP-1002’s oral availability and once-daily dosage may give it an advantage over injectable alternatives. Ann Arbor, Mich.-based Esperion expects to partner the drug “in a couple of years,” according to CEO Tim Mayleben. Pfizer acquired the original Esperion for $1.3 billion in 2004 and retained several key assets, even though it shifted many to the back-burner. A management team including Newton, an original Esperion founder, engineered a 2008 spinout, establishing the new company with an external investment. – P.B. 

Intrexon: The synthetic biology company said May 1 it has reeled in a $150 million Series F round of funding to continue building operations in its four areas, health care, food, energy, and environment. Health care is where Intrexon CEO and chairman Randal Kirk amassed the fortune that he’s been plowing into Intrexon since his first investment eight years ago. Kirk was majority owner of New River Pharmaceuticals, which he sold to Shire in 2007, and Clinical Data, bought by Forest Laboratories in 2011. He became CEO of Intrexon in 2009 and much of the $509 million the firm has raised has come from him or his affiliated venture funds. A majority of the Series F round came from undisclosed new investors, according to the company. The news of the financing came on the heels of the firm’s latest biopharmaceutical deal, an agreement with Soligenix to co-produce monoclonal antibodies for the treatment of melioidosis, an infection caused by Burkholderia pseudomallei endemic to Southeast Asia and Northern Australia. Other recent health care deals include an agreement with AmpliPhi BioSciences to develop a range of anti-infectives and a license of its technology to Fibrocell Science for use in development of fibroblasts and dermal cells for aesthetic and therapeutic applications. Oragenics, Adeona Pharmaceuticals and Halozyme Therapeutics have also partnered with Intrexon. – A.L.
 
All The Rest: New investor Oracle joined in for a second closing of Proteus Digital Health's Series F round, now totalling $62.5M… Celator closed a $39.3M financing to fund a Phase III study of CPX351 in acute myeloid leukemia… HPV vaccine developer Genticel raised €18.2M in Series C funds… Synthetic biology company Gen9 received a $21M investment from Agilent… Acumen Pharma, developing the ACU193 antibody for Alzheimer’s, completed the first close in a $20M Series A… Becker Ventures led a $15M round for AltheRx, developer of overactive bladder candidate solabegron... To support technology to distill real-time patient insights from social media, Treato raised $14.5M… ActoBiotics developer ActoGeniX completed a €10.7M Series B… Anterios collected $8.5M in venture funding for its aesthetic and dermatological drug candidates… viDA Therapeutics’ $3.6M seed round will fund a granzyme B inhibitor for fibrotic, autoimmune, degenerative, and age-related chronic inflammatory diseases… US and European institutional investors put €54M into Belgian biotech Galapagos… Radius Health, which is working on the transdermal and IV candidate BA058 for osteoporosis, raised $43M… Arrowhead Research completed a $36M private offering of common and Series B convertible preferred shares…concurrent with closing its reverse merger with publicly traded Tranzyme, Ocera plans to raise $20M… Health care-dedicated institutional buyers invested $10M in Northwest Biotherapeutics… Lincoln Park Capital Fund provided Elite Pharma with $10M… As it prepares to launch its radiopharmaceutical agent Lymphoseek, Navidea privately raised $5.1M… To pay for the NDA for male hypogonadism treatment CompleoTRT, Trimel publicly sold $Cdn40M in stock… Boron chemistry platform company Anacor completed a $20M FOPO… Cell therapeutics developer NeoStem raised $10M through a public stock sale... Immunomodulating company Idera raised $8.75M in a secondary offering... Less than a year after closing a $51M Series E round, cardiovascular firm Regado Biosciences filed for its IPO… Receptos, Quintiles, and Ambit all set terms for their IPOs… Theravance is spinning off into two independent publicly traded companies, one focused on the Breo deal with GSK, and the other on small-molecule R&D… Supernus netted $72M in a convertible senior secured notes offering… Immunotherapy-focused TNI Biotech filed a Form 10 to become public reporting entity… GSK and Avalon are partnering to start up multiple drug discovery companies over the next three years with a total of $495M in potential funding… Harvard University received a $50M donation to support translational research… Atlas Venture closed its $265M ninth fund... Capital Royalty announced an $805M fund for nondilutive financing. -- Amanda Micklus

Thanks to Paul Bonanos for help with this fortnight's column.  

Photo of ILGWU members in a 1937 May Day parade courtesy of the Kheel Center, Cornell University. 

Financings of the Fortnight Says If It Floats Like A Duck...

The biotech IPO trickle continues, with Supernus Pharmaceuticals debuting its shares May 1 and raising $50 million for its drug reformulation programs. It was a third less than the company had hoped for when it freshened up its nearly forgotten S-1 and decided last month to make a lunge for the window. It’s the seventh biopharma to debut this year – five in the US, two in France (France? Mais oui) – and folks are wondering if the opening will expand.

We would never suggest that one deal, especially one as delayed and discounted, should stand for larger trends without putting it in context. Supernus raised $49 million from private investors (with well over $100 million more raised through non-dilutive royalty deals) and a $50 million IPO. Its immediate post-IPO valuation of $120 million translates into a 1.4x step-up, about in line with the typical biopharma IPO in the post-crash era – starting in 2009, that is.

In the same time period, we found pre-IPO terms for 44 US and foreign biopharmas that eventually went public. They wanted on average to sell shares at $14.50 each (we’ve used the midpoint of initial proposed price ranges, and we’ve converted foreign currencies to dollars). Their actual average IPO price: $11.69, or a 20% discount. (Supernus: A 62% discount, from $13 to $5.)

We found the proposed number of shares to sell for 39 companies. On average they wanted to sell 6.7 million. They actually sold an average of 8.2 million, or 22% more shares than first expected. (Supernus: twice as many shares sold than expected, from 5 million to 10 million.)

In other words, with a big haircut and dilution, Supernus is a lot like its post-recession peers, but more so. There’s another resemblance: It had to sell a good chunk of its IPO shares to existing shareholders. Lead VCs New Enterprise Associates, Abingworth, and OrbiMed Advisors ponied up $33 million – a whopping two thirds of the issue. (With insiders like that, who needs outsiders?) We noted it a couple months ago: insider participation isn’t necessarily a bad omen for post-IPO stock performance. And VCs taking companies public these days know the extra outlay is likely, even necessary to get the deal done.  As Clovis Oncology CEO Pat Mahaffy, who has now taken three biotechs public, said at a conference this week of Clovis’s late 2011 successful IPO, “It would have been hard to pull off without insider participation.” It’s now the new normal, says Mahaffy.

As of this writing Supernus is up $1.06 a few days past its debut, a 21% bump. Its backers, new and old, can only hope that over time it continues to resemble its 2012 peers in post-IPO performance. As a class, they’re up 15% post-IPO (as of the April 30 closing bell), and the class of 2011 is slightly better than that at 19%. For a lot more on IPO performance since 2009, look for START-UP Magazine’s next Valuation Watch. For the choicest biotech financing morsels, stick with…

Argos Therapeutics: Once a candidate for an IPO, Argos has turned to insiders for a $25 million Series D round to support Phase III trials on its treatment for metastatic renal cell carcinoma. It’s been an up-and-down year for Argos, which readied its story for retail investors last July but cancelled the offering in March, and instead returned to existing shareholders for cash. Like publicly traded Dendreon, Argos has a personalized cancer treatment in which tumor cells are modified and infused back into the patient to provoke a tumor-specific immune response. But Argos’ timing could hardly have been worse: Days after filing its prospectus, Dendreon shares lost almost two thirds of their value as questions about uptake, reimbursement and demand arose about Provenge (sipuleucel-T). With just $2 million in the bank at year’s end, Argos held hope for a $66 million listing until late winter before scuttling the offering eight weeks ago. “Public investors would like to put companies in boxes,” Argos CEO Jeff Abbey told our Pink Sheet colleagues. “It makes it hard to differentiate ourselves, although our technology is totally different.” Forbion Capital led the new round, and insiders TVM Capital, Lumira Capital, Intersouth Partners, Caisse de depot et placement du Quebec, Morningside Group and Aurora Funds contributed the balance, bringing Argos’ total funding to $114 million since 1997. With $75 million budgeted to spend through 2015, Argos will need more capital from a partnership, private round or IPO during the interim. -- Paul Bonanos

Telstar Pharma: Astellas Pharma has gotten into the asset-financing game with Telstar, a virtual company formed around an ulcerative colitis treatment spun out by Astellas. The compound, ASP3291, was actually outlicensed to Drais Pharmaceuticals, a New Jersey firm whose cofounders, Donna Tempel and Robert Desjardins, were US senior management at one of Astellas’ predecessors. Tempel and Desjardins went on to form AkaRx with backing from Astellas Venture Management, an investment that brought one of the most lucrative returns in recent biotech memory. Drais is paying an undisclosed upfront fee and royalties on future sales to Astellas for ASP3291. Astellas’ venture arm has contributed a minor stake, less than 20%, of Telstar’s $14 million initial financing round, and parent company Astellas has various rights to the compound: the right of first refusal for the Japanese market, the right of first exclusive negotiation for any future partnering for the compound, and non-exclusive negotiations for ex-Japan markets. By depositing ASP3291 in a corporate entity separate from Drais, it should prove a cleaner exit – and faster return – if the compound succeeds in an upcoming Phase IIa trial. Telstar’s lead investors, InterWest Partners and Sutter Hill Ventures, are also investors in Drais. Astellas said it was considering a similar deal with Drais for a compound in a different, undisclosed therapeutic area. -- Daniel Poppy

Castlight Health: In its second large venture funding in two years, health care shopping pioneer Castlight Health has raised a $100 million Series D round that it says it will use to grow its commercial team and add features to its product. Announced May 1, the round was led by T. Rowe Price, Redmile Group and two major unnamed mutual funds, as well as prior investors. Founded in 2008 as Ventana Health Services, Castlight is a Web-based service that enables customers’ employees to compare out-of-pocket costs for procedures such as colonoscopies, X-rays and MRIs. In 2010, the company raised a $60 million Series C, led by non-venture backers the Cleveland Clinic and Wellcome Trust, as well as VCs such as Venrock Associates, Oak Investment Partners and Maverick Capital. The D round more than doubles Castlight’s total cash raised to $181 million. Last year, Castlight announced a 250% increase in revenue over 2010. Chief marketing officer Peter Isaacson would not detail the company’s 2011 performance, but noted that its customer base and revenue are growing “very quickly,” with many new clients being Fortune 100-sized firms. With so many companies still offering employees health care coverage, one of Castlight’s biggest challenges is determining which potential customers to target, he added. -- Joseph Haas

Transcept Pharmaceuticals: Five months after the eye-opening FDA approval of its sleep aid Intermezzo (a reformulated zolpidem, a.k.a. generic Ambien) Transcept has sold 9 million shares at $4.50 a piece in a public offering to raise $37.6 million net of expenses, not including a possible overallotment sale. Many observers had written off Transcept after the FDA gave the company a second thumbs-down in mid-2011, nearly three years after the firm originally submitted its NDA to the feds for Intermezzo, which is designed to help people fall back asleep after waking in the middle of the night. Transcept is relying on sales by US marketing partner Purdue Pharma to bring in revenue, and the marketer launched the drug last month. Transcept has earned a $10 million fee from Purdue and can draw an additional $80 million, plus royalties. The company, which went public in early 2009 through a reverse merger with Novacea, will use the new proceeds to help develop TO-2061, a low-dose version of ondansetron for obsessive-compulsive disorder. The compound has been used for twenty years to combat the nausea and vomiting caused by chemotherapy, radiation and surgery. The 4.5 million shares offered increase the outstanding share pool by 32%, with 675,000 reserved for the underwriter over-allotment. -- Alex Lash

Photo courtesy of flickrer jamiejohndavies.