Financings of the Fortnight Puts It In Reverse

LinkedIn? Might as well be in a different universe. From where we sit, it's terribly difficult to go public, let alone do it with investors making the equivalent noise of all those kids who came to see the Beatles in 1964.

There's another way to go public, however. Perhaps you've heard that Radius Health this week merged into an acquisition shell created by life-science venture firm MPM Capital. The new Radius already reports to the SEC and plans to apply directly for a listing later this year, with a goal of transitioning to the Nasdaq by early 2012.

Our Pink Sheet colleagues covered it thoroughly, but the gist is that Radius, spurned by Novartis' decision not to option its anabolic bone-building treatment BA058, now has a financial runway to fund Phase III trials and eventually find a new dance partner. If approved, BA058 would compete directly with Lilly’s Forteo (teriparatide), the only currently approved drug that builds bone mass rather than slowing resorption.

Concurrent with the reverse merger, Radius has raised $91 million in an equity-and-debt Series C round. The first tranche consists of $22 million in equity funding and $6.25 million in debt and includes a doubling-down by MPM, which returned to invest above its pro-rata. MPM's Ansbert Gadicke told our Pinkish colleagues that prostate-cancer developer Cougar Biotechnology provided inspiration for the deal. Cougar reverse-merged into a shell company in 2006; three years later Johnson & Johnson scooped it, and its Phase III drug abiraterone, for nearly $1 billion.

How often does that happen? In the last ten years, never, at least not at that price. At least five others besides Cougar have gone on to reap M&A benefits; the next priciest we could find was Solexa, a genomics company that was acquired by Illumina in 2006 for $600 million in stock.

Of 75 reverse mergers we found in our database since 2001, at least 16 included a round of financing either at the time of the merger or nearly so. Cougar nabbed $47.5 million, for example. Not all are engineered as a way to reach the public markets, of course. (Merck/Schering-Plough was technically a reverse merger, which we had a bit of fun with.) The majority are historical footnotes, as you might expect from companies that can't manage the normal route of attracting public investors.

Then again, the "normal route" doesn't exist anymore for biotech companies. Regarding Radius, the biotech has enough going for it to keep old acquaintances interested; Novartis, through its MPM-managed fund, is a new investor, as is Ipsen, the European drug firm that sold Radius the rights to BA058 in the first place in 2005. Another backer is Nordic Bioscience, a contract research firm with deep expertise in osteoporosis drugs. It's taking equity as part of its CRO fee for BA058; talk about having skin (and bone) in the game.

Spin-outs, reverse mergers, incubators, follow-ons, and A, B or C rounds: Your best bet for boning up on all of them is...

BioCritica: Blockbuster gone bad Xigris (drotrecogin alfa), which was hailed as a new sepsis treatment upon approval in 2001, has a new home. After a decade of minimal sales dogged by serious side effects, owner Eli Lilly & Co. is spinning the drug out to BioCritica, a new firm in Indianapolis that will focus on critical-care medicines. Its backers are Care Capital and NovaQuest Capital, and it also received Indiana state funding and support. No financial details were disclosed, but the NovaQuest connection is interesting, seeing how the firm -- once the investment arm of CRO Quintiles Transnational -- was deeply involved in two of Lilly's Alzheimer's drugs, one of which, semagacestat, failed in late-stage trials. NovaQuest is now operating independently of Quintiles, and as this column reported last December, is raising its own fund. BioCritica, meanwhile, is led by CEO David Broecker, who most recently served at the helm of Cambridge, Mass. biotech Alkermes, but previously worked at Lilly in marketing and product planning. BioCritica will continue Lilly's work to find the best uses of the controversial treatment, which has serious bleeding side effects and questionable efficacy in the broad sepsis patient population, but it hasn't disclosed more detailed plans. Lilly already decided a biotech was best suited for the follow-up to Xigris, a compound Lilly out-licensed to Cardiome Pharma in 2007. -- Lisa LaMotta

GenKyoTex: Edmond de Rothschild Investment Funds led a CHF 18 million Series C for GenKyoTex, a Geneva-based biotech focused on developing small molecule inhibitors of NOX family NADPH oxidases, transmembrane proteins at the beginning of the oxidative stress pathway. New investors Vesalius Biocapital Partners and MH Healthcare Venture Management and existing backers Eclosion, SGAM’s Specialized European Fund for Therapeutic Innovation, and Fondation d’Aide Aux Enterprises chipped in as well. GenKyoTex was incubated at Eclosion, the Canton of Geneva based public-private partnership that helps participating entrepreneurs tap a mix of state, university, and industrial resources. GenKyoTex plans to use the new cash to develop its lead candidate GKT137831, currently on the cusp of going into the clinic, for the treatment of diabetic neuropathy, and to support its preclinical portfolio. GenKyoTex is betting that interfering with oxidative stress by inhibiting NOX will help reduce the formation of reactive oxygen species (ROS) that can contribute to cardiovascular, neurodegenerative and metabolic diseases, cancer, and other conditions. The funding is a coming-out party of sorts for GenKyoTex, which has its roots in a three-way academic collaboration between scientists in -- you guessed it -- Geneva, Kyoto, and Texas. Along with the financing the biotech simultaneously announced a spate of executive changes: Ursula Ney, former Antisoma COO, becomes CEO; Phillipe Wiesel, formerly a medical director at Serono, is CMO; and taking on the role of chairman is PregLem CEO Ernest Loumaye. -- Chris Morrison

SpringLeaf Therapeutics: Start-up SpringLeaf has added $15 million to its coffers through a May 12^th Series B venture roundto continue work on a disposable "patch pump" that allows at-home subcutaneous of intravenous biologics, and also to work on a drug , according to CEO Frank Bobe.The cash comes from return investors Flybridge Capital and North Bridge Venture as well as lead and new backer SR One, whose Brian Gallagher, joins the company’s board. (This is SR One’s first participation in a drug delivery-focused firm since Dicerna Pharmaceuticals’ $29 million August 2010 Series B.)MIT spin-off SpringLeaf was founded as Entra Pharmaceuticals in 2007 and two years later filed a patent application entitled “Skin-Patch Pump Comprising a Changing-Volume Electrochemical Actuator.” Gallagher says the firm's “patient-centric” approach will facilitate more cost-effective therapies and the technology overcomes formulation obstacles associated with delivering existing large-volume biotherapeutics, including highly viscous drugs. CEO Bobe declined to disclose any details on the drug SpringLeaf is working on, but he said preclinical results were encouraging. The biotech, which has now raised about $27 million including a December 2008 Series A round, hopes to initiate a clinical trial by the end of 2012.-- Maureen Riordan

ImmunoGen: Best known for its antibody-drug conjugate (ADC) work, ImmunoGen said May 20 it has raised $84 million before expenses in a follow-on offering, selling 7 million shares at $12 per share. The fundraising comes as ImmunoGen's stock has reached its highest levels since the early 2000s amid growing hopes that ADCs, which attach a strong cytotoxic agent to a therapeutic antibody for a more precise attack on cancer cells, are on the cusp of medical success after three decades of frustrating clinical progress. ImmunoGen is part of the optimism; it has contributed the cytotoxin and "linker" technology used in Genentech/Roche's T-DM1, considered the next iteration of Herceptin. Indeed, ImmunoGen's stock run-up is due in part to new top-line randomized Phase II T-DM1 data released in April that showed improvement in progression-free survival in first-line metastatic breast cancer patients. Good news about T-DM1 is more a boon to ImmunoGen's platform than its immediate finances, as the firm would only receive single-digit royalties from any commercial sales. The targeted antibody, aimed at HER-2 positive breast cancer, is also in non-randomized late-stage trials. Underwriters led by Jefferies & Co. have the option to buy up to 1.05 million more shares. -- Alex Lash

Many thanks to Paul Bonanos and Amanda Micklus, who contributed mightily to this week's introduction.

Photo courtesy of flickr user Rd. Vortex via Creative Commons license.

Financings of the Fortnight Covets Thy Neighbor's Bubble

The B-word is back, and it rhymes with "trouble." With 21 US IPOs in April alone, no wonder the barbarians are lined up at the gates, clamoring to get a piece.

There have been 31 initial filings this month, the most active month since 40 companies filed in August 2007, according to IPO watchers Renaissance Capital. Exciting, no? So how many of these newly minted or wannabe public companies are in our little corner of the world? Two IPOs, Tranzyme and Sagent Pharmaceuticals, and no new filings.

Let that sink in for a moment. It's Bubble 2.0, or 3.0, or 6.0, with little old ladies in Pasadena trying to grab a piece of Facebook on private secondary markets, and not a single biotech firm filed papers this month.

Now, there might be some moral high ground in keeping one's distance from ye olde irrational exuberance. A bubble is generally a bad thing, leading to Pets.com and far too much exposure of Angelo Mozilo's tanning-bed face. No wonder the other side is protesting too much. See how hard this tech VC argues that the current mania is anything but a bubble?

But to those on the bio side of the fence, the lush green grass of Mark Zuckerberg's backyard looks awfully tempting. At BayBio last week, when talk on a mid-stage funding panel got around to building strong biotech companies, Pfizer business-development executive Jim McLoughlin cautioned other panelists to think long-term and not create a bubble. (As if they could.) Versant Ventures managing director Camille Samuels jumped in: "Hey, I'll take a bubble!"

She said it with a laugh, but consider the VC's alternative these days: Waiting for guys like McLoughlin (and the committees behind them) to decide they like your portfolio firm's Phase II asset enough to offer a modest up-front payment and earn-outs or milestones.

European investment firm LSP Life Science Partners isn't waiting around for the private equity exit ramp to materialize. Not only is it launching a public-equity fund, it has floated the fund, dubbed LSP Life Sciences Fund, on Euronext Amsterdam.

The firm claims a 150% return on public investments, which it began making in 2008 on behalf of Dutch pension fund administrator APG Investments. Its new dedicated fund, for which it raised £30 to £35 million privately, follows in the footsteps of life-science VCs like Abingworth, MPM Capital, and OrbiMed Advisors who have begun straddling the fence in recent years. On the private side, LSP's fifty or so holdings have included Jerini, KuDOS, U3 Pharma and Movetis. The first three sold privately, while Movetis listed in late 2009 before Shire gobbled it up a few months later. Our "Pink Sheet" colleagues will have more on LSP soon, so we don't want to, ahem, burst their bubble. Instead, let's pop the cork on another bottle of...

Synta Pharmaceuticals: On April 15, cancer and inflammation drug discovery company Synta Pharmaceuticals raised $35.2 million in a registered direct offering, the second-highest grossing PIPE this year behind Arena Pharmaceuticals. Synta sold 7.2 million shares at $4.89, a 6% discount to the ten-day average. Company insiders bought about 22% with institutional investors scooping up the rest. After several ups and downs in its ten-year history, Synta is The Little Discovery Engine That Could, dusting itself off after each disappointment. And there have been several. The Shionogi BioResearch spin-off raised more than $200 million in venture financing before a failed IPO attempt in 2005. Less than two years later, and after another $40 million cash infusion, the company finally went public, selling shares at $10 a pop. Soon thereafter it secured its first Big Pharma partner when GSK acquired US co-promote rights to the biotech’s elesclomol, an apoptosis-inducing candidate that disrupts cancer cell energy metabolism. But Synta got a shock in March 2009 when Phase III trials in metastatic melanoma showed more deaths in the elescomol arm than with the standard-of-care arm, and the trial was shut down. GSK returned rights, but not before forking over $130 million. After the elesclomol failure, Synta has pinned its hopes on its lead compound the Hsp90 inhibitor ganetespib, which is unpartnered.* For the April 15 RD offering, Synta issued no warrants and did not use an underwriter. -- Amanda Micklus

Silence Therapeutics: The shingle Silence hung out to advertise a placement of 275 million shares, with hopes of grossing up to £5.5 million, is a sign of the times for the RNA interference crowd. Silence is the latest RNAi firm to find itself in financial or strategic difficulties, and if shareholders don't approve the new stock sale, announced April 25, the company says it will run out of cash by the end of the third quarter. Whether or not that transpires, Silence says it is shutting down its California office, a legacy from its December 2009 merger with Intradigm, and looking to replace CEO Phil Haworth. When Silence and Intradigm tied the knot, the firms hoped their combination would speed the development of delivery systems, a major obstacle in turning fragile short interfering RNAs into viable therapeutics that reach their intended targets. Investors such as Alta Partners and Frazier Healthcare also backed the merged entity with a £15 million financing priced at 23 pence a share. If that sounds bad, please note that the new placement is priced at 2 pence a share. No, that's not a typo. Momentum in RNAi has been on the wane for the past two years, then came big red flags last fall when two major partners of Alnylam Pharmaceuticals delivered bad news. First Novartis, a 13% owner of the biotech, passed on an expensive option to expand its collaboration, then Roche said it was dropping all RNAi-related work. More dark skies earlier this year came when delivery firm Tekmira Pharmaceuticals brought a lawsuit against Alnylam; and RXi, undergoing a management overhaul, bought a struggling company for its late-stage breast-cancer treatment and shifted its focus away from RNAi. To top it all off, Merck & Co.'s $1.1 billion purchase in 2006 of Sirna Therapeutics, once Alnylam's rival, has yielded nothing that Merck is willing to discuss publicly. Meanwhile, Silence is offering shareholders a chance to buy up to £1 million in shares before the placement. Those who participate in full will only be diluted 45% by the placement; otherwise dilution will be about 54%, the company said in its notice to shareholders. -- Alex Lash

Bluebird bio: When a VC at last week's Bay bio meeting was asked about the next big thing, he pointedly said it wouldn't be RNAi, which was reminiscent of gene therapy. (He didn't mean it as a compliment.) Bluebird bio begs to differ, having just raised a $30 million C round from new investor ARCH Venture Partners and others to pursue its gene therapy technology, called LentiPak, to treat rare diseases such as childhood cerebral adrenoleukodystrophy (CCALD) and beta-thalassemia/sickle-cell anemia. Formerly known as Genetix Pharmaceuticals, Bluebird aims to get lead program Lenti-D into a registrational Phase II/III trial for CCALD later this year. The firm says its technology, using lentiviruses instead of retroviruses as the viral vector, should provide better safety than the now-infamous gene trials of the previous decades. The LentiPak technology works this way: A patient's hematopoetic stem cells are extracted, exposed to a viral vector, then re-inserted into the patient, reconstituting his or her bone marrow. In addition to ARCH, the Series C is backed by returning investors Third Rock Ventures, TVM Capital, Forbion Capital Partners and Easton Capital Investment Group. Genzyme Ventures, which co-led last year's Series B, is not involved because of the ongoing merger with Sanofi-Aventis, Bluebird CEO Pat Leschly told "The Pink Sheet" DAILY. -- Joe Haas and A.L.

Circassia Holdings: Yes, Virginia, there are refreshing wellsprings of early-stage capital out there, and Circassia is fortunate to be in deep with one of them. The UK allergy vaccine developer said April 19 it has raised £60 million ($98 million), the second largest European venture round this year and one of the largest ever. It was led with a £15 million tranched commitment from Imperial Innovations Group, the tech transfer and investment arm of Imperial College, London, where Circassia's T-cell vaccine platform ToleroMune was developed. Imperial Innovations has exclusive rights to IP coming from the college, as well as access to technology from three other top UK schools. It recently said it has commitments from shareholders to contribute another £140 million ($220 million), nearly three times what the group has invested in start-ups. It's also one of the rare investment funds to go public itself, having raised £26 million in a 2006 listing on the AIM exchange. (Perhaps an inspiration for LSP?) Imperial has been a backer of Circassia since its founding in 2006, and the majority of the funds raised in this round will go towards financing phase III development programs for Circassia's cat and ragweed allergy therapies. Circassia also aims to use the funds to complete phase II testing of the company's house dust mite and grass allergy T-cell vaccines, and will advance the development programs for three additional allergy therapies and its psoriasis treatment, PAP-1, a selective Kv1.3 inhibitor, recently acquired from Airmid Inc. -- Faraz Kermani

Photo courtesy of flickrer Beige Alert under a Creative Commons license.

Melanie Senior contributed to this week's introduction.

*Due to an editing error a previous version of this column stated incorrectly that Synta's ganetespib compound was partnered. We regret the error.

Financings of the Fortnight Asks for a Moment of Silence

The Pacific gives, the Pacific takes away. There is no rhyme or reason. Life is short, strange, horrible and precious. Let's have a moment of silence and contemplation, and if you haven't helped Japan yet, please do what you can. This is one good place to start, and this is another.

Here on the other side of the Ring of Fire, where we see ourselves in the reflection across an ocean, it's been a difficult week to focus on the task at hand. But life is full of work that must be done. As our mother often told us, "If it was fun all the time, it would be called play." Boy, did we hate hearing that when we were 11 years old.

But this week, in our little corner of the biopharma world, Mom's admonition put us in mind of Exelixis, the San Francisco Bay Area firm whose discovery engine and small-molecule pipeline were once the envy of emerging biotechs everywhere.

But the firm seemed stalled for a couple years in the late stages of clinical testing, and 2010 became Exelixis' annus horribilis, if we could borrow a phrase from Her Majesty. It lost longtime CEO George Scangos to Biogen Idec, it laid off two-thirds of its 670 employees with plans for even more, a key partner for its lead compound XL-184 walked away from the program, and it shut down all R&D beyond XL-184, now known as cabozantinib.

But Exelixis, sleeves rolled up, upper lip stiff, found a silver lining at the end of the year. In November cabozantinib returned remarkable results in a small Phase II prostate cancer study. Of 20 men whose cancer had spread to the bone, 19 had their lesions shrink or disappear, an effect one investigator called "spectacular," though with the caveat that the mechanism of action remained mysterious.

And now with its drastically pared headcount, narrowed pipeline, and more interim data from the prostate study, Exelixis has enjoyed another surprising result: a stock price that rocketed from below $3 a share last summer to nearly $13 earlier this month, prompting the company to raise cash from a stock sale. And indeed it did, selling 17.25 million shares at $11 each to net $179 million. (It closed at $10.90 Thursday March 17.)

Under previous CEO Scangos, Exelixis was nimble in its fundraising, tapping what seemed like every possible source from asset financing to debt vehicles to grand-scale partnerships. That willingness continues; perhaps not surprising, as top management has remained fairly stable through the turmoil. New CEO Michael Morrissey has been a top scientist -- or the top scientist -- at the firm since 2000; longtime CFO Frank Karbe has stayed on, too.

There's a long way to go before cabozantinib proves worthy of approval in prostate cancer or any other indication, but the difficult work, not to mention the pain of letting hundreds of colleagues go, is paying off in at least one respect, as investors have voted their approval with their pocketbooks. That might be cold comfort to those laid off, or to current employees still pushing the rock up the hill toward product approval, but with the cash, Exelixis has more resources to keep fighting another week, another month, another year, and perhaps to bring a drug to market that helps patients do the same. In the end, isn't that what we all hope for?

Aerie Pharmaceuticals: North Carolina-based Aerie pulled in a $30 million Series B on March 7, with new investors Clarus Ventures and Sofinnova Ventures joining an existing syndicate that includes Alta Partners and TPG Biotech. Proceeds will fund continued development of Aerie’s glaucoma pipeline, with the lion’s share likely to support clinical trials of AR-12286, which is in the lead to become the first so-called rho-kinase inhibitor to market. These inhibitors directly modulate the trabecular meshwork, the spongy smooth-like tissue in the eye responsible for fluid outflow. Because of the new mechanism of action, it’s believed drugs such as AR-12286 can reduce intraocular eye pressures, either alone or used in combination with existing medicines. Aerie published positive top-line Phase IIb data in September 2010, building on an earlier 88-person study showing the compound was as good as Pfizer's standard-of-care Xalatan in reducing IOP, with mild to moderate eye redness observed in a minority of patients. With the genericization of Xalatan imminent, however, the commercial hurdles for next-generation glaucoma drugs have risen, and potential partners are cautious about paying too much for an asset without proof that it can dethrone a very good and cheap drug as a first-line agent. To build its case for AR-12286, Aerie is running additional Phase II trials and plans to initiate Phase III trials by year’s end. With its Series B cash, the company is certainly in a better negotiating position when it comes to partnering, with less pressure to do something near-term. It certainly helps that glaucoma clinical trials are shorter and less expensive than studies in cancer, diabetes or cardiovascular disease, allowing Aerie to keep the R&D burn low. -- Ellen Foster Licking

Nimbus Discovery: The Cambridge, Mass. firm emerged from stealth mode on March 10 with a seed funding of undisclosed size from Atlas Venture Partners and some guy named Gates. Bill, perhaps? Yeah, we think that was it. The name sounds vaguely familiar. Nimbus is using technology from computational drug design specialist Schrödinger, which holds an undisclosed material equity stake in the biotech. Schrödinger’s in silico WaterMap technology evaluates the energy of individual water molecules at a target’s binding site, and knowing that architecture makes lead optimization much more efficient, says Atlas partner Bruce Booth. Schrödinger’s fundamental business is software, not drug development, so the company worked with Atlas to build Nimbus, which has exclusive rights to use Schrödinger’s tools around 20 targets. What further sets Nimbus apart from traditional discovery ventures is its structure as an LLC holding company that acts as an umbrella over target- or molecule-specific C-corp subsidiaries. Each time a candidate is licensed, it will be in effect an acquisition of a company that includes just the IP and data surrounding that candidate. The structure, though more complex, is reminiscent of Index Venture’s PanGenetics, which also ran multiple companies (one of which, an anti-NGF antibody, was sold to Abbott Labs) under one management and investment structure. Spending less than $2 million, Nimbus has generated an inhibitor of IRAK4, an immunokinase target implicated in various cancers and inflammatory conditions, and lead scaffolds against other targets, Booth told our START-UP colleagues. You'll have to read the upcoming issue to find out more, which we highly recommend because you'll also find out about other biotechs, such as Adimab and Ablexis that are embracing the LLC model and diving deeper into the asset-financing pool. -- Chris Morrison

BioCryst Pharmaceuticals: BioCryst has sold $30 million in debt, using milestones and royalties from its flu medication Rapiacta (peramivir) to secure the notes. The deal, which closed March 9, is an interesting twist on the typical royalty play. BioCryst created a wholly-owned subsidiary, JPR Royalty Sub LLC, and assigned it future payments due from Shionogi & Co. on the sales of Rapiacta in Japan and Taiwan. BioCryst, which also has peramivir in Phase III in the US, is eligible to receive royalties between 10% and 20% on net sales of the drug under its 2007 licensing agreement with Shionogi. JPR issued $30 million in senior secured notes, due Dec. 1, 2020, and will pay out 14% interest annually derived from the drug's income. BioCryst netted $23 million from the transaction and will use the proceeds to develop other pipeline assets, such as BCX4208 in Phase II for gout. The deal differs from other recent royalty stream deals, in which companies such as NeurogesX and Dyax obtained funding from private-equity royalty investors in exchange for future potential earnings. BioCryst is on the hook for the repayments even if the milestones and royalties from Shionogi don't come through, and it said it's reserving $3 million to cover shortfalls. -- Joseph Haas and Maureen Riordan

Omthera Pharmaceuticals: Heading into a key Phase III trial for its omega-3 cardiovascular treatment, Omthera of Bedminster, NJ, said March 14 it has raised a $34 million Series B round led by new investor New Enterprise Associates. The company will use the cash for a just-initiated Phase III trial of Epanova, which proved superior GlaxoSmithKline's Lovaza, the only omega-3 prescription treatment on the market, in a recently completed trial. Omthera is positioning Epanova as a treatment for very high triglycerides (greater than 500 mg/DL). Omega-3 fatty acids exist naturally in algae and fish oil, but prescription versions vying to compete for a potentially huge market are not all the same, varying their formulations with different ratios of two types of Omega-3s, eicosapentaenoic acid (EPA) and docosahexaenoic acid (DHA). For example, Lovaza contains 46% EPA and 38% DHA, Epanova is 55% EPA and 20% DHA, and another entry, a Phase III compound from Amarin, is 96% EPA. The new round, which is not tranched, puts Omthera's total cash raised over two rounds to $40.4 million. NEA partner David Mott, the former CEO of MedImmune, will join the Omthera board, and existing investor Sofinnova Partners joined NEA for the B round. Omthera licensed worldwide rights to Epanova from Chrysalis Pharma. -- Alex Lash

Photo courtesy of flickr user OiMax under a creative commons license.

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

Financings of the Fortnight Waits For the IPO Parade To Start

Will the recent IPOs of Pacific Biosciences, a cut-rate Aegerion Pharmaceuticals, and a reportedly massive debut by a Chinese drug maker with a huge distribution network unleash a parade of life-science debuts? We don't know the answer to that question, but we thought it would be interesting to check in with the folks at Zealand Pharma, which said Nov. 3 it plans to raise up to $146 million on the Copenhagen stock exchange (yes, Zealand is based in Denmark, not the southwest Pacific).

Let's step back a second. If you abide by the oft-chanted mantra that the IPO is no longer an exit but another round of financing, then the real test of an IPO is how it positions the company. Certainly the most startling post-IPO exit in recent history belongs to another European biotech, Movetis. It debuted on the Euronext in November 2009, raising about $140 million and winning our Exit/Financing of the Year nod; nine months later it was betrothed to Shire in a $565 million deal.

Now here comes Zealand, which tried five years ago to go public. If it meets its fundraising goal, Zealand's coming-out would make it the biggest in Europe since Movetis. Like its Belgian brother, Zealand has a late-stage asset with potential broad market appeal: the Phase III GLP-1 analog lixisenatide, partnered to Sanofi-Aventis. It plans to file for approval in the EU in 2011 and a year later in the US, according to Zealand CEO David Solomon.

Solomon also told our Pink Sheet colleagues that an IPO "isn't a requirement for us." (How nice to have that flexibility.) But it's hard to believe its investors, who've piled $145 million into the company, are blissfully ignorant of the parallels to Movetis. Of course, Zealand doesn't need to go public to be bought at a tasty premium, but once public, it's that much harder for Big Pharma to force a target's shareholders to accept earnouts.

One thing to keep in mind: Zealand's shareholders, which include Denmark's Sunstone Funds and LD Pension, France's CDC Innovation and Allianz Private Equity, and the Netherland's Life Science Partners, will be subject to a 360-day lock-up period following the IPO.

For sheer cash on the barrel head impressiveness, no one will outpace Pacific Biosciences, whose IPO we describe below. But we're leery about correlating enthusiasm for sequencing technology with drug lust, so to speak. So if you want to know which way the biopharma wind is blowing, Zealand is a better place to hoist your sails -- at least until next April, when once again this is the place to be. But don't stay out in the cold, especially since it's not even winter yet. Curl up next to our hot stove with the latest edition of...


Karyopharm Therapeutics: Karyopharm derives its name from karyophrerins, proteins that shuttle from the nucleus to the cytoplasm, and has attracted $20 million in Series A financing to further its work on selective inhibitors of nuclear export (SINE). The Series A came entirely from Cyprus-based Chione Ltd., the investment vehicle for an unnamed wealthy individual, according to Karyopharm director Michael Kauffman, MD, PhD. Newton, Mass.-based Karyopharm started last year with $1 million from angel investors. It's using computational chemistry technology invented by its CSO and acting president Sharon Shacham, PhD, who used to head up drug development at now-defunct Epix Pharmaceuticals. Epix licensed Dr. Shacham the technology before the company filed for bankruptcy in 2009. Both Shacham and Kauffman, the former Epix CEO, helped establish the start-up, which is interested in oncology, autoimmune disorders, inflammation, and viral diseases including HIV. It will soon nominate a lead candidate for cancer and focus on hematological malignancies. To destroy tumors and ensure healthy cells retain tumor suppressor proteins in their nuclei, Karyopharm is developing small molecules that prevent the nuclear export of multiple proteins from the diseased cell, allowing the drug candidates to modulate the activity of key cancer pathways. The company’s platform targets the main culprit: CRM1, the nuclear pore complex that facilitates the import and export of the tumor suppressor proteins between the nucleus and cytoplasm. The 3-D structure of CRM1, which was discovered by Yuh Min Chook, PhD , was published in Nature in 2009. -- Amanda Micklus

Pacific Biosciences: DNA sequencing instrumentation specialist PacBio got the gold in late October, netting $186 million from a 12.5 million share IPO priced at $16. This comes four months after closing a $109 million Series F financing, which included a $50 million investment from strategic partner Gen-Probe as part of the companies’ June 2010 R&D collaboration. With Gen-Probe, PacBio's long-term goal, not to mention that of its competitors, is the clinical diagnostics market as featured recently in IN VIVO. But as is typical for life science tools providers, the company will first target the smaller academic and applied research market. PacBio has received orders for eleven of its instruments including from several of the best-known large-scale sequencing centers in the US and from Monsanto for agricultural research, according to its IPO prospectus. PacBio is also looking beyond DNA sequencing to potential applications for its technology in the study of chemical and structural modifications of DNA and processing of RNA and proteins, and it believes it can provide these additional capabilities through enhancements to software and consumables without the need for modifications to its basic hardware. As the cost of taking sequencing measurements drops due to innovations from PacBio and others, commercial success will depend at least as much on the ability to provide extensive high-quality data analysis as on hardware. Indeed, as noted in our recent discussion of Merck’s intention to utilize the sequencing capabilities of BGI in China, the resources dedicated to sequencing have flipped from the front end to the back end -- from being measurement heavy to being computation and data analysis (bioinformatics) heavy. -- Mark Ratner

Omeros: A year after netting $63.4 million from its IPO, the first for a pure-play U.S. biotech after the market crashed in 2008, Omeros has sealed a $20 million PIPE deal with Microsoft cofounder Paul Allen's private investment firm Vulcan Capital and its affiliate, Cougar Investment Holdings. In tandem with the financing, Washington State’s Life Sciences Discovery Fund (LSDF) also provided a $5 million grant to Seattle-based Omeros. The biotech says it will use the money to advance its G protein-coupled receptor program, aiming to perform high-throughput screening of about 120 “orphan” GCPRs, or those without a ligand. The goal is to identify what it believes could be up to 65 new druggable targets for a broad range of indications. In exchange for their investment, Vulcan and LSDF are eligible to receive tiered net proceeds earned by Omeros from the GCPR program, including product sales and specified partnership arrangements such as milestone payments. Vulcan is better known for its media and technology investments but has a life science track record. A year ago IN VIVO estimated Vulcan made ten times its investment in BiPar Sciences -- it led the Series A and reupped twice -- when BiPar was bought by Sanofi-Aventis. For their Omeros bet, Vulcan and LSDF will receive a blended percentage in the mid-teens on the first $1.5 billion in proceeds from the GCPR program; beyond that threshold, the percentage decreases to 1% of net proceeds. Vulcan also received three sets of five-year warrants, each good for 133,333 shares in Omeros, at exercise prices of $20, $30 and $40. Omeros, which sold its IPO at $10 per share, closed at $8.02 on Nov. 3. -- Joseph Haas

Mind-NRG: Always curious about asset financing strategies, we took notice when Index Ventures on Oct. 27 pledged up to €10 million ($13.4 million) to Swiss start-up Mind-NRG. Index has made a habit of asset-centric financings, backing development of a single candidate, or a small handful of candidates with a single mechanism of action, typically housed within companies with ultra-lean overheads and minimal staff. There are few examples, industry-wide, of success, but Index can point with justification to Abbott Laboratories' 2009 purchase of PanGenetics -- effectively a single-asset acquisition -- as its good-news story in this field. Abbott paid a whopping $170 million up-front for a Phase I antibody targeting nerve growth factor. Mind's asset, NRG-101, is a pre-clinical peptidic neurotrophic factor that crosses the blood brain barrier and may therefore have disease-modifying potential in diseases such as Parkinson's or Alzheimer's. The molecule was sourced from German proteomics group ProteoSys for no cash, just a 38% stake in Mind. Index holds the rest. -- Melanie Senior

Photo courtesy of flickr user Zack Sheppard.

Financings of the Fortnight Works on Its Stand-Up Routine

Did you hear the one about two VCs, two fund managers, and a banker who walk into a bar… or maybe onto a stage. No, wait, it gets better.

The biotech community could use a little comedy after the last couple years, and the final panel def jam at this week’s Bio Investor conference in San Francisco provided plenty. All the classic elements were there as host George Milstein, a longtime West Coast biotech banker, played the straight man to his ensemble cast of characters, er, panelists.

The context of the discussion was more sobering, what with three-quarters of the year behind us and the situation becoming clear: recession or not, it’s still pretty damn hard for biotechs and their investors to find cash.

First, VCs are still struggling to raise it. DowJones VentureSource reported this week that 2010 fundraising is on track to equal 2009, which represented a six-year low. Second, pharmas are unwilling to spend it. The upcoming October issue of IN VIVO has an excellent industry overview, but here’s a taste: overall licensing activity is down 20% from 2007, and within that option-based license deals are up. M&A volume is behind 2009’s pace so far, and what there is has skewed toward companies with marketed products and generics, bad news for those trying to carry the torch of emerging science and innovation, or better yet, fund it. Do we even have to mention the IPO market? Oh, OK. This year’s IPOs, such as they are, have been a terrible investment (median performance of -20%).

Cue the mirth. Milstein summarized the ho-hum landscape but soon, thankfully, went for the cheap laughs. A typical example: panelist David Sable of Special Situations Funds admitted he’d only been an investor for a few years; before that the trained ob-gyn said he “was doing pap smears.”

Milstein waited a perfect beat then countered, “So, how is this different?”

Later, Milstein asked panelists what they thought of Sanofi-Aventis’s hostile bid for Genzyme. Biotechnology Value Fund portfolio manager Matthew Perry produced a Magic 8-Ball that he said his colleague Oleg Nodleman got as swag from a Berkshire Hathaway retreat. Perry shook it, waited, and read the result: “Sweet deal!” (This reporter found Nodelman later and verified the 8-Ball indeed sported Warren Buffett and Charlie Munger’s cartoon faces.)

Public-side investor that he is, Perry proceeded to berate Genzyme for the temerity -- shocking! -- of putting money into R&D instead of shareholder dividends. Just because it brought one or two products to market, said Perry, doesn’t mean it'll bring more. Quit while you’re ahead and give the extra cash to me, seemed to be his message. It didn’t quite jibe with Perry’s lament a few minutes earlier that biotechs weren’t being allowed to grow and aspire to be the next Biogen Idec, Amgen or Genentech.

No matter: Perry was faithfully playing the role of the large, loose cannon. And why not? Every great comedy needs one: think John Goodman as Walter Sobchak in the Big Lebowski. Perry played it to the hilt, badmouthing a few more companies, or the investors who poured money into them, along the way. (Theravance, Xoma and Maxygen were three we counted.)

Milstein chose other sidekicks perfectly. New Leaf Ventures managing director Srini Akkaraju was the over-the-top gloomer who pretended he’d rather be anywhere else than talking biotech investing on a late Wednesday afternoon (“We should all be asking ourselves what we’re doing here”). Akkaraju was also glum about Big Pharma, whose cycles of merger and job-cutting were doing little to solve unmet medical needs. “They’re dealing with their problems in a MacGyver kind of way." (We love the idea of Pfizer being held together with used bubble gum, a pair of shoelaces, and a bottle of nail polish.)

Then again, said Akkaraju, investing in biotech is “completely irrational.” At one point, he called his own business “ludicrous” three times in one sentence, provoking nervous laughter. Sometimes the best comedy has the audience squirming in their seats.

The panel had serious moments, too. Sofinnova’s Jim Healy made the excellent point that the rise of contingency-based M&A is on a collision course with the time limits of venture funds. What happens, he asked, when the contingencies in deals pay out past the expiration date of the funds who hold the rights? (This will no doubt warm the heart of one of our colleagues whose favorite soapbox is the creation of a CVR exchange.)

And for all his boisterousness, Perry said something that sent chills up the spines of any biotech hoping to tap the public markets soon. “Most of our capital is in cash,” Perry said. “I’d love to find great early stage companies, but they’re all getting acquired.” Perry will pull the trigger when he sees fit. His firm earlier this year bought a 6.6% position in Swiss firm Addex Pharmaceuticals, which had recently been crushed by a Phase IIb failure of its lead mGluR5 modulator for migraine. As we noted in our previous column, BVF followed with a $20 million investment via combined registered direct and convertible debt, the latter of which was necessary to get around strict Swiss laws limiting size of public investment. The gymnastics were all the more impressive seeing how Addex did the deal without a financial advisor, as its CEO Tim Dyer said earlier at the conference.

Which just goes to show, you can laugh all the way to the bank and you don’t even need a banker. Thanks, we’re here all week. Whenever you’re in need of good material, look no further than….

Convergence Pharmaceuticals: The CNS exodus from GlaxoSmithKline has begun. GSK said in February it would end CNS research and sold its facility in fair Verona, Italy, where Aptuit now makes its scene. Two clinical assets and six earlier programs targeting ion channels in chronic pain are now in the hands of Convergence, backed with $35.4 million from a syndicate including Apposite Capital, New Leaf Ventures and SV Life Sciences. At first it seems odd that VCs are willing to fund development of assets whose mechanism is old hat. They also address a large, potentially primary care area like chronic pain and face huge clinical trials and high regulatory safety hurdles. But the Cambridge, UK firm says its assets, unlike most of the sodium- and calcium-channels out there or in development, are state-dependent. That is, they only inhibit neurons in the rapid-firing state that's associated with chronic pain. CEO Clive Dix, who helped steer PowderMed into Pfizer’s arms in 2006 for $300 million, takes over with a dozen ex-GSK employees in tow. GSK currently holds an 18% stake in the tranche of funds that Convergence has received to date, which SV's Bingham says is roughly half the full £22 million. Its stake will dilute as further funds are provided, but the Big Pharma will receive further equity if Convergence hits certain milestones. GSK has a board observer seat but no other strings attached. -- Melanie Senior

Agennix: SAP cofounder Dietmar Hopp strikes again. Through his investment company dievini Hopp BioTech holding, Hopp has ended up with 59% of German biotech Agennix following a €76 million ($104 million) PIPE financing that will allow Agennix to complete a Phase III trial of its lead oral compound, talactoferrin, in non-small cell lung cancer. Having previously held 29% of Agennix, dievini is applying to German financial regulators for an exemption to the rule that it must make an offer for all of the company’s shares if it owns more than 30% of them, but as of Oct. 1 hadn’t heard back from the Bundesanstalt fuer Finanzdienstleistungsaufsicht, also mercifully known as the BaFin. In the financing, 20.5 million new shares were offered at €3.81 per share; 29% were taken up by existing investors, and 71% by new investors in a private placement or by dievini. Agennix also has plans to develop talactoferrin for severe sepsis, and it has a multi-targeted kinase inhibitor in Phase I. Investor Hopp has supported the German biotech sector for a number of years; in recent weeks dievini also participated in a €54 million series C funding round for immatics biotechnologies, which is developing cancer vaccines and is based in Tubingen, Germany. -- John Davis

Tobira Therapeutics: On Sept. 29 the antiviral developer announced a $31.2 million Series B round that was led by Novo AS and included earlier backers Domain Associates, Frazier Healthcare Ventures, Montreux Equity Partners, and Canaan Partners. According to the Form D filing, the company has sold $14.2 million so far. The money will fund a Phase IIb trial of lead candidate TBR652 in CCR5-tropic, treatment-naïve HIV patients, slated to start mid-2011. Tobira launched in 2007 with exclusive global rights to the CCR5/CCR2 antagonist plus a follow-on HIV compound from Takeda Pharmaceutical. New Jersey-based Tobira believes TBR652 has advantages over Viiv Healthcare’s marketed CCR5 antagonist Selzentry (maraviroc) due to its anti-inflammatory properties through CCR2 antagonism, with the potential to be dosed only once daily and administered with other antiretrovirals. Tobira, which previously raised $31mm in Series A financing, was established by Domain partner Eckard Weber who has a reputation for starting up companies around one or two molecules rescued from the shelves of Japanese drug firms. In previous efforts -- NovaCardia and Conforma Therapeutics, for example -- his firms raised capital quickly and sold off the assets through acquisition or spin-off. -- Amanda Micklus

CytomX Therapeutics: Backed by angels in its infancy, antibody developer CytomX has turned to VCs for a tranched $30 million Series B round that will support a northbound move from Santa Barbara, Calif., to the San Francisco Bay Area. Third Rock Ventures provided the lion’s share of the round alongside Roche Venture Fund’s minority stake. Third Rock itself recently established an office in San Francisco, with new CytomX board member Charles Homcy anchoring the firm on the West Coast; Boston-based partner Neil Exter also took a seat. Both have roots at Millennium Pharmaceuticals, as does CytomX CEO Nancy Stagliano. Third Rock invested from its $378 million Fund I, closed in 2007, rather than its new $426 million Fund II. CytomX is developing modified antibodies, trademarked as Probodies, that ideally will affect diseased tissues while sparing healthy ones. They are designed to avoid unwanted reactions or to respond directly to proteases present in diseased tissue. The company intends to use the funds for a pair of oncology-related INDs, and will receive a portion of the funding in a second tranche based on milestones related to staffing, platform research, ongoing product development, and the relocation. -- Paul Bonanos

Photo courtesy of flickr user Sam Pullara.

Financings of the Fortnight Checks Out Big Rounds in the Big Apple

Even in good times it's not easy for a private biotech to take its lead compound to market all by itself. These dreary days, it's rarer than an empty cab in the Midtown rain. That's a New York reference, pal. It's PSA week, whaddya expect?

Despite all the distractions, like the perfect weather and giant slices of pizza everywhere, we couldn't help but notice when this fortnight brought us not one but two venture-backed firms whose investors are doubling down to get their protégés through Phase III.

Bully for them, we say, if they can get through registrational trials without a Big Pharma partner. At that point, Big Pharma partners hungry for near-market pipeline assets won't have a choice but to lavish riches upon them, right? Well....that's what we used to say about getting to a Phase II/proof of concept milestone. Now we're hearing things like this: "How do VCs fund all of these companies to Phase III, which seems to be the stage that Big Pharma is comfortable with?" That's what Quaker BioVentures founding partner Brenda Gavin told START-UP recently.

Let's not make too much fuss about two biotech fundings -- and we'll get to them in a moment -- but it's hard to ignore the larger context: Of the many biotech-focused venture funds running out of gas, not all are likely to re-up. So our first instinct was to wonder who's behind these whopping late-stage rounds that are designed to push a biotech's lead asset through Phase III. Are they the product of VCs rolling the dice one last time on portfolio companies that represent their best chance to get out with a bang?

So far, no. As you'll see below, one recipient of generous funds, Relypsa, tapped returning investors to help push its potassium-binding agent through Phase III. But the round was led by new investor OrbiMed Advisors, a firm flush with newly-raised cash. The second recipient profiled below, the German firm immatics biotechnologies (which we assume can now afford to buy some upper-case letters) turned to existing European investors for about half its new round. But one returning investor -- indeed, the one that remains its largest shareholder -- is dievini Hopp BioTech holding (again with the lower case!), which invests the cash of billionaire Dietmar Hopp, founder of software giant SAP and probably not among the biotech funds running out of gas.

An interesting side note: immatics CEO Paul Higham told our Pink Sheet colleagues that his efforts to raise cash from US investors earlier this year ran into reluctance to commit large sums, especially for a cancer immunotherapy based in Europe focused on renal cell carcinoma. (Those conversations took place before Dendreon's Provenge approval, Higham said.) Another interesting side note: Strategic Transactions tells us the three largest drug-related venture rounds so far this year are all European companies: Archimedes ($100 M), AiCuris ($75 M), and now immatics ($71 M).

Is there anything to the Eurocentric bent of these rounds? It's not as if optimism is brimming across the pond. A survey of VC attitudes released in June revealed just as much gloom in Europe as in the US, with hope for venture expansion pointed more toward emerging markets.
If you're keeping tabs, by the way, another recipient of funds earmarked for a late-stage push is Calistoga Pharmaceuticals, the Seattle firm working on isoform-selective PI3 kinase inhibitors. Its $40 million Series C round in June will fund a registrational program for its unpartnered lead CAL-101 and other clinical work, and the startup recently brought on board Pharmacia and PTC Therapeutics veteran Langdon Miller as executive VP of R&D to oversee the work, but CEO Carol Gallagher told us this week the money won't get them to NDA.

We all need a push every so often to get to our destinations. Which reminds us, the traffic outside our 44th St. hotel is a nightmare, so it's time to shut our laptops, duck into the subway, and get on board another installment of....

Relypsa: Doing its part to get a US biotech on the list of top fundraisers, Relypsa said September 13 investors had committed to a $70 million Series B round to help the firm push its potassium binder RLY-5016 into Phase III. Relypsa president Gerrit Klaerner said the firm can run the trial itself, with plans to reduce recruitment needs by incorporating Phase II data into the trial design. '5016 is a binding polymer that stays in the gastrointestinal tract and absorbs excess potassium, a potentially deadly condition. One application Klaerner would like to address is patients who would otherwise might have to avoid angiotensin-converting enzyme (ACE) inhibitors and angiotensin receptor blockers (ARBs) to lower blood pressure, as these drugs can have the side of effect of releasing potassium into the blood stream. An acute buildup of potassium is called hyperkalemia and can lead to arrythmia or cardiac arrest. OrbiMed Advisors led the round, but it also included investors who backed Relypsa's predecessor, Ilypsa, which Amgen bought in 2007 for $420 million for its lead compound, a phosphate binder for chronic kidney disease patients. To create Relypsa, Amgen spun out the rest of Ilypsa's assets to the same management team. -- A.L.

immatics biotechnologies: Developers of cancer immunotherapies have attracted renewed interest from investors and big pharma since the US approval of Dendreon’s Provenge in April. But German biotech immatics biotechnologies says it had plenty of investor interest from its own countrymen before Dendreon's success, leading to a Series C funding round of $71 million (€54 million). Immatics’ technology is markedly different from Dendreon’s, however, as it's based on administering the same combination of chemically synthesized, tumor-associated peptides to each patient with a particular cancer. The skill is in identifying antigenic peptides that actually induce a strong immune response, said immatics executives. The financing will fund a Phase III clinical trial of immatics’ lead therapeutic vaccine in renal cell carcinoma. Approximately half of immatics new funds came from existing investors including dievini Hopp Biotech holdings and Wellington Partners. New investors were venture capital funds advised by MIG Verwaltungs AG and AT Impf GmbH. The latter is owned by the Strüngmann brothers, who co-founded the German generics company Hexal, before selling it some years ago to the Swiss generics-and-original-research combo, Novartis. -- John Davis

Addex Pharmaceuticals: Addex raised CHF 20 million ($20 million) in a combined registered direct offering and debt transaction with Biotechnology Value Fund. Announced Sept. 15, the deal was structured as 593,567 new registered shares in Addex for CHF 6 million and the issuance of six-month mandatory convertible notes for CHF 14 million. The transaction was priced at $10.18 a share, a 12 percent premium over Addex’s volume weighted average share price during the five trading days prior to Sept. 14. Upon closing, BVF will own 9% of Addex’s outstanding shares, while the convertible notes will become 1,371,069 new shares on March 14, 2011, representing 17% of the firm’s outstanding shares. It comes a week after Addex landed a $900,000 grant from the Michael J. Fox Foundation to help finance a Phase II study of lead compound ADX48621 in Parkinson’s dyskinesia. Addex says the BVF cash infusion will give it runway into 2012 and help it advance several programs, including '621, while leaving it less vulnerable to another stock price decline should one of its programs disappoint. BVF was able to buy into the Swiss company at a bargain price because of last December’s failure of gastroesophageal reflux disorder and migraine candidate ADX11059, which resulted in Addex’s share price tumbling by about 75%. -- Joseph Haas

Anacor Pharmaceuticals: Just as it's pulled in a $15 million milestone from GlaxoSmithKline in connection with a 2007 option deal to develop an antibiotic based on its boron chemistry platform, Anacor has decided to try again for an initial public offering. On Sept. 10, the Palo Alto, Calif. biotech filed its S-1 with $86 million as its placeholder until it determines price range and share volume. In August 2007, Anacor filed to go public with a goal of raising up to $57.7 million then withdrew in December 2008 due to unfavorable market conditions, though it's worth noting it had plenty of time to make its issue before the financial tsunami struck. As part of the 2007 collaboration with GSK, the pharma committed to invest $10 million in a future private placement, which it did in January 2009. Schering-Plough also invested in that private placement as part of a 2007 licensing deal for a topical antifungal, but S-P isn't listed in the S-1 as one of Anacor’s principal stockholders. Anacor says it has raised $88 million in equity capital since its inception in 2002. In addition to advancing its pipeline of five clinical candidates, Anacor presumably will use the proceeds to cash out its equity investors, which include Rho Ventures (25.5%), Venrock Associates (16.1%), Care Capital (12.4%) and Aberdare Ventures (11.5%), along with GSK (14%). Anacor plans to begin a Phase III program for lead program AN2690 in onychomycosis in the fourth quarter of this year. -- J.H.

Photo courtesy flickr user Adrian8_8.

Financings of the Fortnight is... the Most Interesting Biopharma Column in the World

FOTF never really goes on summer vacation, unlike those namby-pambies over at DOTW. But as befits the Most Interesting Biopharma Column in the World, we constantly travel far and wide. And when we travel we cannot help but meet other Most Interesting People who want to discuss all manner of things, from protein folding to peregrine falcon migration patterns to the amyloid hypothesis to American trade policy.

Despite having vocal cords that have addressed the United Nations General Assembly and performed Tristan und Isolde -- all in one day -- even we sometimes overdo it. This morning, after a night spent deep in conversation with three well-funded post-doctoral frauleins under the glow of poolside tiki torches and a gibbous subtropical moon, we felt slightly hoarse and downed an emergency anti-logorrheic. (That means this week's installment is short and sweet.)

Still, we can't help but note that all four editor's picks this fortnight underscore the changing nature of biotech venture capital. Heavily tranched rounds are now a mainstay, and perhaps here to stay. We've got two of 'em for you. We also profile an unusual PIPE with four participating VCs who are usually as private as private can be, and word from the feds that the Department of Health and Human Services wants to start a pandemic/emergency/countermeasure venture fund. They'd be wise to check in with Kleiner Perkins, which launched its own $200 million "flu fund" in 2006.

Stay informed, my friends, and when you read about biopharma financing, make sure it's...


Anchor Therapeutics: The peptide drug developer closed on $10 million of its Series B round from inside investors, with a new goal of $15 million – half its original target of $30 million. The company hopes new backers will join TVM Capital, HealthCare Ventures and the Novartis Option Fund, who supplied the first tranche of the new round as well as $19 million in Series A funding in 2008. “A little bit of setting goals is testing the market and seeing what the reality is,” CEO Rick Jones told our Pink Sheet colleagues. Anchor is developing candidates called "pepducins" to selectively bind to G protein coupled receptors. Anchor hopes its pepducins can trigger specific responses inside the cells and avoid side effects often associated with small molecule drugs targeting the receptors. Anchor's most advanced program is a CXCR4 agonist designed to attract stem cells to accelerate healing in fractures and myocardial infarctions. Novartis maintains an option agreement with Anchor that includes over $200 million in potential milestones as well as royalties. -- Shirley Haley and Paul Bonanos

Taligen Therapeutics: Taligen collected a $10 million tranche of its massive $65 million Series B round, bringing to $36 million the contributions of Sanderling Ventures, Clarus Ventures, Alta Partners and High Country Venture since 2008. That’s on top of a $4 million Series A and a small seed round, all in support of Taligen’s development of therapies that target the alternative pathway of the complement system, a surveillance system employed by the body to attack and clear pathogens that may go awry in certain inflammatory diseases. Taligen also revealed a broad patent on its compound TT-30, a replacement of the Factor H protein that regulates reactions in the complement pathway. CEO Abbie Celniker told The Pink Sheet that Taligen is likely to bring TT-30 into Phase I for an unspecified orphan disease in the fourth quarter of 2010. The compound is said to be applicable to a range of indications including age-related macular degeneration, atypical hemolytic uremic syndrome, and paroxysmal nocturnal hemoglobinuria,. Taligen is actively seeking a partner for its ophthalmic program, but expects the rest of its promised Series B money will help it take an in-house candidate into Phase III on its own. -- PB

Achillion Pharmaceuticals: Months after bringing in $22.9 million in a follow-on public offering, Achillion turned to venture capital investors to raise $50 million in a warrant-heavy PIPE financing. At least one, Clarus Ventures, has backed the anti-infectives developer before. Under the deal, announced Aug. 18, Achillion sold 19.755 million shares of common stock at $2.49 per share, its closing price as of Aug. 17. But for an additional $0.125 per unit, buyers also received seven-year warrants to buy 0.35 shares in the New Haven, Conn., firm for an exercise price of $3.1125 a share. Structuring the financing this way put Achillion on the hook to issue another 6.921 million shares, resulting in stock dilution that analyst Brian Skorney of ThinkEquity LLC said would add 69 percent to company’s share count as of second-quarter 2010. “The return to a more venture capital-based investor structure somewhat mitigates the benefit of the raise and will effectively decrease share liquidity,” he wrote in an Aug. 20 note. Joining Clarus, which participated in a 2008 PIPE that netted Achillion $29.5 million, were Domain Associates, Quaker BioVentures and Pappas Ventures. Achillion said it will use the proceeds to move lead candidate ACH-1625, a protease inhibitor for hepatitis C, into Phase II in September, while bringing two other HCV compounds, pan-genotypic protease inhibitor ACH-2684 and NS5A inhibitor ACH-2928, into the clinic in early 2011. -- Joseph Haas

Medical Countermeasure Strategic Investor: As part of a broad review of US medical countermeasure strategy released Aug. 19, an HHS committee is recommending the creation of a government-backed $200 million venture fund to boost startups working on products critical to medical emergencies, terrorist attacks or pandemic outbreaks. Different than BARDA, the agency charged with dispensing so-called "Bioshield" funds to build the national emergency stockpile, the countermeasure fund would invest in companies, explained National Institute of Allergy and Infectious Diseases director Anthony Fauci at a press conference. Known for now as MCMSI, the fund needs Congressional authorization. It would focus on companies developing new drugs to fight multi-drug resistant organisms, novel mechanisms for disrupting pathogenesis through host pathway targeting, and multi-use platform technologies for diagnostics, vaccines/prophylaxis and therapeutics, according to the review report. (The full HHS review is available here, with the MCMSI section on page 15.) As proposed, the fund would operate independently of the government and try to leverage private capital. The HHS committee cited as a relevant model In-Q-Tel, a CIA-funded firm that invests in intelligence high-tech. -- Cathy Dombrowski and Alex Lash

Photo courtesy of flickr user TreyDanger.