Financing Activity for Biotech Deals Heats Up

by Marie Daghlian

The economic mood finally seems to be brightening a year after the global economic meltdown turned from a drizzle into a downpour. Public stock offerings are on the rise. Incyte Pharmaceuticals (INCY) hopes to raise as much as $145 million in a follow-on offering of 20.7 million shares, following on the heals of Rigel (RIGL) which raised close to $100 million and Vivus (VVUS), topping out at $108.8 million.

A number of venture financing and some interesting partnering and M&A activity also marked the fourth week of September. On September 25, Select Medical Holdings (SEM), an operator of specialty hospitals, priced its IPO of 30 million shares at $10 per share. In China, three life sciences companies (Lepu Medical Technology, Anhui Anke Biotechnology, and Chongqing Lummy Pharmaceutical) were among the first ten companies approved to list on the Nasdaq-like GEM, the Shenzhen Stock Exchange’s Growth Enterprise Market, which is launching after a long period in development.

Biogen Idec (BIIB) moved ahead with a $356 million hostile bid for Facet Biotech (FACT), two weeks after Facet rejected its previous proposal. Biogen Idec’s $14.50 per share all cash offer represents a 64 percent premium over Facet Biotech’s $8.82 share price right before the first proposal. For the time, Facet’s board of directors has recommended that its shareholders do nothing until they can review and consider the offer, which will happen by the end of this week.

And according to the rumor mill, Abbott Laboratories (ABT) has emerged as a contender for Belgium’s Solvay (SVYSY.PK) as a rival bidder for Swiss pharmaceutical company Nycomed in a deal with a potential value of as much as $7 billion. There is also talk that UCB, another Belgium-based conglomerate, is also interested in the private-equity controlled Swiss pharma. Officials from the three companies, however, are not commenting.

In a deal worth a potential $1.5 billion, San Carlos, California-based Nektar Therapeutics (NKTR) signed a worldwide licensing agreement with AstraZeneca (AZN) for two of its therapies: NKTR-118, in late-stage development for the treatment of opioid-induced constipation, and NKTR-119 in early stage development to treat pain without constipating side effects. Nektar developed both compounds using its proprietary small molecule advanced polymer conjugate technology platform. AstraZeneca will pay Nektar $125 million upfront and assume responsibility for the continued development of both programs. Nektar is eligible for milestones that could total up to $1.4 billion if the products achieve considerable levels of success.

Belgian molecular diagnostic powerhouse Qiagen (QGEN) had a busy week. First the company used the Clinton Global Initiative annual meeting to announce a major collaboration with Merck on a program to increase access to HPV vaccination and HPV DNA testing in some of the most resource-poor countries of the world.

A couple of days later, Qiagen disclosed that it was acquiring U.K. companion diagnostics company DxS for $95 million in cash upfront and up to an additional $35 million if specified commercial and other milestones are met. DxS has recently signed companion diagnostic deals in oncology with several major pharmaceutical companies. With this acquisition, Qiagen affirmed the rapidly increasing importance of personalized medicine in healthcare. At the same time, the company announced that it is currently active in over 15 collaborations with pharmaceutical companies to market and/or develop companion diagnostic products.

To help pay for the acquisition, Qiagen commenced a public offering of 27.5 million shares priced at $20.25 per share, a slight discount to its closing price of $21.02 in Thursday trading on the Nasdaq. The company expects gross proceeds of $557 million to help pay for DxS, as well as for other purposes.

Denmark’s LEO Pharma paid Ireland’s Warner Chilcott (WCRX) $1 billion to repurchase rights to several topical psoriasis treatments as well as rights to all products in LEO’s development pipeline held by Warner Chilcott, and all inventories of the products. Warner Chilcoot will use the proceeds to help finance its pending acquisition of Procter & Gamble (PG) Pharmaceuticals.

Several start-ups raised significant amounts of venture capital. Topping the list was Zogenix which closed a $51 million Series B preferred stock financing. The money came from Clarus Ventures and Domain Associates, current investors who led the round. They were joined by all the existing investors, including Scale Venture Partners, Thomas, McNerney & Partners, and Abingworth Management as well as new investor, Oxford Finance Corporation. The capital will be used to finance the January 2010 launch of Sumavel DosePro, needle-free delivery system, which was recently approved by the FDA to treat migraines. Zogenix is based in San Diego and Emeryville, California.

Massachusetts-based molecular diagnostics company PrimeraDx closed a $20 million Series C financing led by CHL Medical Partners with participation by many of the existing investors, including Abingworth, InterWest Partners, Malaysian Technology Development Corporation, MPM Capital, Burrill & Company and the Invus Group.

PrimeraDx will use the funding to continue the commercialization of ICEPlex system, an integrated platform that provides a cost effective, “walk-away” work flow for laboratories. Although the company’s initial products are for infectious disease management, PrimeraDx plans to extend its focus into oncology to support personalized cancer therapy management through diagnostic, prognostic, staging and therapeutic monitoring.

Boston based healthcare informatics company Humedica launched with $30 million in venture backing from Bain Capital Ventures, General Catalyst Partners, North Bridge Venture Partners, and boutique life sciences investment bank Leerink Swann. Officials said the company’s patient information software is currently being implemented in unnamed hospitals and medical groups throughout the country.

And South San Francisco renewable fuels developer LS9 completed a $25 million round of funding from investors included CTTV Investments, the venture capital arm of Chevron Technology Ventures, Flagship Ventures, Khosla Ventures, and Lightspeed Venture Partners.

In May this year, LS9 announced a strategic partnership with Procter & Gamble to support the joint development and commercialization of LS9 technology to produce key chemicals used within the P&G portfolio of consumer products. LS9 uses synthetic biology methods for a one-step fermentation process that results in the creation of high-value, low-carbon fuels and sustainable chemicals.

Finally, in the past two weeks 20 biotech companies have received noncompliance or delisting notices from Nasdaq while one company, Inhibitex (INHX), announced that it had regained compliance with Nasdaq listing rules. And Ivivi Technologies, a New Jersey medtech company which had received a noncompliance notice in June, sold its assets to an entity controlled by its CEO Steven Gluckstern for an aggregate purchase price of $3.5 million.

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Comments

[jimmy Turano:]

Once again, 'MRNA' is left out of the article in seeking alpha.
Is this stock the Rodney Dangerfield of RNAI platform companies?
Ceo, French, approval of a drug, three new issuances of stock, repayment of debt, two partnerships, and big potential with $4 dollar price target by experts from Research firms.
How about a real down to earth prospective on 'MRNA'?
09/27/09 WARRANTED OR NOT?

Sep 27 08:40 AM

[cowlady:]

And what of NEPH?

Sep 27 06:02 PM