Friday, January 25, 2013

Financings of the Fortnight Jumps On Board The A-Train

We're here to point you toward the newly published 2012 A-List, dear readers, but first let's note some big numbers. US listed biotechs raised at least $1.8 billion in stock and debt sales the past couple weeks. We've highlighted two below, Onyx Pharmaceuticals and InterMune, but the totals help highlight a broader imperative: Go public if you can. The grass is greener.

But easier said than done; the US JOBS Act, meant to ease regulation, spur IPOs, and let a million crowdfunders bloom, has so far done little of anything. Our colleagues at START-UP described here the snail's pace of the crowdfunding portion of the JOBS agenda. And the JOBS Act's so-called "IPO on-ramp" seemed after the bill became law in April to be more of an LA freeway at rush-hour, with all of eight biotechs going public in the US. Will the bottleneck clear soon? If all the institutional investors and hedge funds crossing over into biotech recently are any indication, a bunch of extremely well-funded private companies will try their hands soon.

Reeling in more private money instead of going public is still an option for some companies, but generally the numbers don't recommend doing so. Biotechs in 2012 attracted $4.1 billion, down from $4.8 billion in 2011, according to the National Venture Capital Association's Money Tree report. Medical device investments dropped to $2.4 billion in 2012, from $2.8 billion in 2011. There have been worse years in the past decade, but the decline stands out in a year that featured legislation meant to spur investment. A recent survey of investment bankers shows a lot of skepticism about the JOBS Act (h/t to Dan Primack's "Term Sheet" email), a big dip from their positive attitudes last summer. Life-science VCs never sported the rose-colored lenses, as noted in the second annual life-science venture survey that START-UP published last September.

Then again, a flurry of IPO activity this quarter or next could make that slim "Too soon to tell" majority look all the wiser. Other VCs voted for optimism with their checkbooks in 2012: the early-stage investors. There weren't a ton of them, as you might extrapolate from the overall VC numbers noted above. One way to take the temperature is to tally the disclosed Series A rounds, which is why START-UP publishes its A-List every year. Lucky you: It just went live Thursday night, and for the non-subscribers we'll share this tidbit that shows biopharma Series A activity was, in dollar terms, practically flat, but deal volume was up, making for a small decline in average deal size (UPDATE: removing deals for which no dollar figure was disclosed suggests a slight uptick in Series A average haul):

Click through, and you'll find lots more discussion. We've got device and diagnostics numbers, too, as well as The A-List itself: the 12 companies we feel best exemplify the year's scientific, financial and strategic trends in early stage life science venture: ArmaGen Technologies, Avelas Biosciences, Cibiem, Cotera, Enterome, Galera Therapeutics, Global Blood Therapeutics, Intact Vascular, Novira Therapeutics, Oculeve, Solstice Biologics, and Warp Drive Bio.

If that's not enough to make you tear down the paywall, the A-List feature also includes profiles of two very active Series A investors and a round-up of the year's activity for our A-List alumni, who stretch back to 2004. It's all so A-riffic, you'd half expect the official celebrity spokesperson to be A-Rod. A-hem. Before we get too carried A-way, let's A-vail ourselves of the latest A-dition of...

Onyx Pharmaceuticals: Intent on proving this year it isn’t a one-trick pony with the success of kidney and liver cancer treatment Nexavar (sorafenib), Onyx took advantage of a share price upswing to raise $359 million in a follow-on, selling 4.4 million shares at $81.50 each. According to Elsevier’s Strategic Transactions database, it’s the largest life sciences follow-on since orphan disease play Alexion Pharmaceuticals raised $465.1 million in May 2012.  It’s also the largest financing Onyx has done to date. As of Sept. 29, 2012, Onyx had $573 million in cash. (It also tallied an operating loss of $228.9 million in the first nine months of 2012.) The firm expects to use the cash in part for trials intended to push Kyprolis (carfilzomib) all the way up to frontline therapy. In addition, it’s waiting for data due the second half of 2013 that would be the basis of a European regulatory application; Onyx is planning to market the drug on its own there. Kyprolis was first approved in July to treat relapsed/refractory multiple myeloma. Onyx said in January it had more than $62 million in Kyprolis sales after five months on the U.S. market. Shares were up by as much as 14%, but they've since retreated to a 2% gain in the new year. Still, Onyx almost doubled its share price in 2012, so investors seem content for now to eschew profitability. But that likely won’t remain the case for too long.  — Stacy Lawrence

InterMune: More from the fortnight’s follow-on fiesta! InterMune raised $229 million in concurrent public offerings of convertible senior notes and new stock, even as it continues to work to get its potential blockbuster in idiopathic pulmonary fibrosis approved in the U.S. Priced Jan. 16, the offering netted $102 million in sales of 2.5% convertible senior notes due in 2017, along with $127 million from the sale of 13.5 million common shares at $9.90 apiece. The senior notes convert to common stock at a price of $12.87, 26% higher than InterMune’s average stock price of $10.19 before the offerings. The Brisbane, Calif. company is conducting a Phase III ASCEND trial to obtain evidence that pirfenidone, a dual inhibitor of TGF-beta and THF-alpha synthesis, can produce significant improvement in forced vital capacity in IPF patients. Already marketed in Europe as Esbriet and Japan as Pirespa, pirfenidone would be the first drug approved in the U.S. for IPF. The current standard of care is lung transplant. InterMune said it would use the proceeds to fund ASCEND and commercialization efforts for the drug, as well as to retire 5% convertible senior debts that come due in 2015. — Joseph Haas 

Versartis: Like several venture-backed companies of late, Versartis is the latest to take another round of venture funding and aim for late-stage trials on its lead program rather than strike a partnership or execute a trade sale. The Redwood City, Calif. developer of VRS-317, a long-acting version of human growth hormone intended to treat pediatric growth hormone deficiency, announced January 15 it has closed a $25 million Series C round, building on at least $32 million in previous funding. Aisling Capital led the new round, while prior investors Index Ventures, New Leaf Venture Partners, and Advent Venture Partners’ Life Science Fund provided follow-on funding. Like its successor Diartis, Versartis was spun out of extended half-life technology developer Amunix in 2010 to establish a separate, single-asset entity that would house VRS-317. Shortly after Versartis’ $11 million Series A, Amunix founder Willem "Pim" Stemmer told START-UP in 2010 that Versartis could be on the block as soon as late 2011, with one or two rounds of funding in between. Now, Versartis says it’s preparing to go long, with a 2014 Phase III trial slated to succeed the Phase Ib/IIa trial currently underway. Versartis declined to discuss its new deal. Other companies, such as Intarcia Therapeutics and Flexion Therapeutics, have also recently taken big rounds instead of crafting an exit or partnership. – Paul Bonanos

Aileron Therapeutics: The biotech with the most advanced "stapled" peptide program said January 14 it has hit a milestone and triggered the second tranche of its Series D round, bringing the total to $42 million. The cash will help push its lead drug ALRN-5281 into the clinic to treat patients with orphan endocrine disorders. The compound's clinical progress will be closely watched, as stapled peptides are one version of constrained peptides, altered to hold their shape, penetrate cells and perhaps hit previously undruggable targets. They have also sparked a recent and vigorous debate, as well, as the brand-new edition of START-UP explains. Aileron holds exclusive rights to the stapled version, which was invented at Harvard Medical School in the previous decade. Its Series D, first unveiled in 2009, was notable for a syndicate that included four corporate venture groups: SR One (of GlaxoSmithKline), Roche Venture Fund, Lilly Ventures, and Novartis Venture Fund. All four are participating in the new tranche, along with existing investors Apple Tree Partners. — Alex Lash

The Best of the Rest: BioCrossroads Indiana Seed Fund made $500k and $250k investments in, respectively, Esanex – to advance Phase I trials for an Hsp90 inhibitor for solid tumors that Pfizer acquired in its 2008 buy-out of Serenex – and Algaeon, which is developing algae cultivation technology for nutraceuticals and to date has only raised money from its founders and angel investors… From its new life sciences fund, TVM Capital has made the first investment in Kaneq Bioscience, a spin-off of Kaneq Pharma that's developing early-stage compounds for metabolic diseases and cancer... To fund Phase II trials for Aganirsen in back-of-eye diseases, including the orphan indication neovascular-associated corneal graft rejection, Gene Signal has received undisclosed funding from a group of private investors who have backed the Swiss company since its 2000 formation... Ariad Pharmaceuticals priced a $300mm FOPO of 15.3mm shares at $19.60. RNAi-based therapeutics developer Alnylam Pharmaceuticals brought in $174mm through the public sale of 9.2mm shares at $20.13… Aegerion Pharmaceuticals closed a $67.9mm public offering A FOPO of 6.7mm shares at $7.50 brought in $47mm for Aveo Pharmaceuticals… Antibiotics-focused Trius Therapeutics raised $34.1mm in a 7.2mm share FOPO priced at $4.75… Antibody player KaloBios has set terms for its IPO of 3.85mm shares at a proposed $12-14 range… Israeli biotech Alcobra has hopes for an $18.75mm IPO on Nasdaq to advance its work on cognitive dysfunction disorders… A price range between $22-$25/share was set for the planned IPO of Pfizer’s animal-health unit Zoetis, which it’s spinning off as an independent company... Through the sale of ten-year, 2.125% convertible subordinated notes, Theravance brought in $282mm… Raising $105.7mm by selling 3.25% six-year senior notes, Pacira Pharmaceuticals will use $30mm to repay debt, the rest to fund continued commercialization and development of additional indications of Exparel, its injectable post-surgical anesthetic… Through the offering of five-year convertible senior notes, Auxilium Pharmaceuticals collected $200mmPharming Group secured €16.35mm ($21.71mm) in convertible bond financing through a syndicate of existing institutional investors led by Kingsbrook Opportunities Master Fund… Oculus Innovative Science is spinning off Ruthigen as an independent public company to develop RUT5860 for preventing infection in trauma and surgical procedures… Concurrent with venture funding from a group of investors led by Colorado-based High Country Venture, ViroCyt – an InDevR spin-off developing technologies that enable rapid quantification of viruses – began operations. — Maureen Riordan

A-Train photo courtesy of flickr user The Eyes of New York

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