March Roars in for Life Sciences

by: The Burrill Report


After a quiet February, the month of March came roaring in like a lion for life sciences deals and financings. The disappointing IPO of Anthera Pharmaceuticals (NASDAQ:ANTH) seemed to be a sign that there may be no easy route to go public for the queue of companies waiting behind it. After postponing its IPO last week, Anthera went public on March 1 pricing its shares at $7 – half the price it had originally expected. Underwriters, led by Deutsche Bank, have a 30-day option to purchase up to an additional 900,000 shares to cover over-allotments. Major shareholders in Anthera include VantagePoint Venture Partners and Sofinnova Venture Partners [see story].
The Hayward, California biotech raised $42 million and will use net proceeds of approximately $36.7 million to further its anti-inflammatory programs. Concurrent with the closing of its IPO, Anthera raised $17.1 million in a private placement to certain of its existing investors. The company also issued 5.3 million shares of common stock to Eli Lilly (NYSE:LLY) and Shionogi in satisfaction of a $3.5 million milestone payment related to the initiation of the VISTA-16 trial for A-002, which Anthera expects to initiate in the near future. Anthera’s stock closed the week where it started – at $7.
On the acquisition front, the big story of the week was Merck KGaA’s (OTCPK:MKGAY) successful bid to buy U.S. lab supplier Millipore (MIL) for $107 per share in cash, or a total transaction value, including net debt of approximately $7.2 billion. The German pharmaceutical and chemical giant trumped Thermo Fisher’s (NYSE:TMO) $6 billion bid last week [see story].
Merck’s executive chairman Karl-Ludwig Kley said the combination is an excellent strategic fit and will enhance the value of the company beyond its current base.
"By combining Millipore's bioscience and bioprocess knowledge with our own expertise in serving pharma customers, we will be able to unlock value in our chemicals business and transform it into a strong growth driver for Merck,” said Kley. Currently Merck’s chemicals division generates about 25 percent of total revenues. This will increase to 35 percent following the transaction.
Merck plans to maintain Millipore's senior management and its headquarters in Billerica, Massachusetts and combine it with Merck's U.S. chemicals headquarters. The company expects that the combined business will generate annual cost synergies of around $ 100 million that will be realized within three years from the closing of the transaction.
The first week of March also had a breakthrough venture capital financing. U.K.-based Archimedes Pharma broke a 15-year record for a European funding round, raising $100 million in new funding led by new investor Novo Growth Equity, the growth equity fund of Novo A/S, with participation by major current investor, Warburg Pincus, a global private equity firm. The funding was also Novo Growth Equity’s first investment since it was established at the beginning of 2009. The funds will be used to establish Archimedes' operations in the United States, support the growth of its specialty pharma business in Europe, and support the global commercial launch of PecFent (previously known as NasalFent), Archimedes' fentanyl nasal spray for the treatment of breakthrough cancer pain. PecFent has been filed for approval in Europe and the United States and is expected to be approved for commercial sale in both regions during 2010. Phase 3 studies demonstrated that PecFent showed onset of pain relief within five minutes of dosing, statistically significant improvements in pain relief versus immediate release morphine, together with high levels of patient acceptability and consistent effectiveness in use [see story].
Finally, Japanese pharmaceutical company Astellas (OTCPK:ALPMF) made another unsolicited bid for an American biotech company. One year after losing out to Gilead (NASDAQ:GILD) in its attempt to takeover CV Therapeutics (CVTX), Astellas made a $3.5 billion hostile bid for OSI Pharmaceuticals (OSIP) – going directly to shareholders with an offer of $52 per share, a 31 percent premium to its 52-week high. OSI’s stock has surged since the offer, however, to a high of $56.39 on March 4 and OrbiMed, a major stockholder of OSI shares said that it wants $60 a share. OSI’s prize is the cancer drug Tarceva, partnered with Roche (OTCQX:RHHBY). Will Roche come into the bidding and offer a better price? Only time will tell [see story].
Click to enlarge