Financing Activity May Lift Cloud Hanging over Biotech Industry

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 |  Includes: CGRB, ELXR, JNJ, NVS
by: The Burrill Report

By MARIE DAGHLIAN

Although investors are grasping at any positive sign of improvement in the economy to push a market rally forward, the recession is still very much with us. A rally in the beginning of last week fizzled ahead of the holiday weekend as investors remained concerned about the U.S. government's interventions to stimulate the economy. But while biotech leaders from all over the world gathered at the 2009 BIO International Convention in Atlanta, financing activity in the sector raised hope that the cloud hanging over the industry may be lifting a little.
Public markets remain dry, but companies raising venture capital and private equity financings are having quite a bit of success. Small U.S. public companies are tapping the private markets and seem to be especially fond of registered direct offerings, with six of the nine PIPEs completed last week structured in this manner.
Venture capital investment had a strong showing during the week with 15 deals. In one of the largest ever rounds of venture financing, newly formed Clovis Oncology, based in Boulder, Colorado, announced that it had secured $145 million in start-up financing. The company, founded by former executives of Pharmion Corporation, is focused on acquiring, develop and marketing innovative anti-cancer compounds in all stages of clinical development. Investors in Clovis include Domain Associates, New Enterprise Associates (NEA), Versant Ventures, Aberdare Ventures, Abingworth, Frazier Healthcare Ventures, ProQuest Investments and the Company's management team. Pharmion was acquired by Celgene (NASDAQ:CELG) in 2008 for $2.9 billion.
Molecular imaging products developer Avid Radiopharmaceuticals completed the first closing of a $34.5 million Series D financing led by Alta Partners, Also participating in the financing were existing investors AllianceBernstein, Safeguard Scientifics, Pfizer Venture Investments, Lilly Ventures, RK Ventures Group, LLC and BioAdvance (Biotechnology Greenhouse of Southeastern Pennsylvania).
Philadelphia-based Avid will use the proceeds to fund the completion of the development and, if approved, to commercialize its Alzheimer’s amyloid imaging compound. The funding will also allow it to continue it mid-stage clinical development of its Parkinson’s disease imaging compound. In conjunction with the progress of its clinical trials, Avid is providing its amyloid imaging compound to measure amyloid burden as a biomarker in Phase II and Phase III trials of experimental drug under development by several major pharmaceutical company collaborators.
Specialty pharma Sagent Pharmaceuticals raised $30 million in a second Series A financing extension with pre-existing and new strategic investors. The round was again led by Vivo Ventures. With more than 200 products in development, Sagent, based in Schaumburg, Illinois, focuses on injectable products, and has filed more than 70 aNDAs to date, according to the company’s CEO Jeffrey Yordon. He expects to have more than 20 products in the market by the end of the year.
The pharmaceutical industry continued its biotech buying spree as Johnson & Johnson (NYSE:JNJ) said it will acquire Cougar Biotechnology (CGRB) for approximately $1 billion in a cash tender offer to gain access to a late-stage, first-in-class prostate cancer treatment. Cougar is currently conducting two late-stage trials for abiraterone acetate, a first in class compound for the treatment of prostate cancer. The Los Angeles-based biopharmaceutical company has compounds in development for the treatment of prostate cancer, as well as breast cancer and multiple myeloma, will work with Ortho Biotech Oncology Research & Development, a unit of Centocor Research & Development, a Johnson & Johnson company.
Cambridge, Massachusetts biotech Elixir Pharmaceuticals (ELXR) completed a $12 million equity financing and entered into an agreement with Novartis (NYSE:NVS) granting the pharma an exclusive option to acquire Elixir following the successful completion of a Phase 2a clinical study of Elixir’s lead oral ghrelin antagonist, currently in preclinical, IND-enabling studies. The deal with Novartis could exceed $500 million and also includes Novartis' right to an exclusive worldwide license under pre-agreed conditions.
Elixir is developing small molecule drugs that mimic these longevity responses to treat a range of age-related diseases, including the major metabolic diseases. In addition to its oral ghrelin antagonist program, Elixir has two product candidates which have recently completed Phase 3 clinical trials for the treatment of type 2 diabetes.

Finally, pharmaceutical companies are determined to be major players in the generics market. Novartis is acquiring the specialty generic injectables business of Austria's EBEWE Pharma for $1.2 billion, strengthening its Sandoz generic division's global platform of generic oncology medicines. And Pfizer (NYSE:PFE) entered into licensing agreements with two pharmaceutical companies based in India, Aurobindo Pharma and Claris Lifesciences, in a move that strengthens its position in generic medications in emerging markets.