Tengion's IPO Comes In Well Below Initial Range: Biotech's Latest Deals, Financings

by: The Burrill Report

By Marie Daghlian

Public adversity for risk reared its head last week as Tengion (TNGN) completed its IPO, pricing well below its expected range. The Pennsylvania-based regenerative medicine company, which is focused on growing replacement organs from a patient’s own cells, raised $30 million by offering 6 million shares at $5. In its first filing in December 2009, the company targeted raising $40.3 million, which it raised to $46 million in an amended filing in mid-March. At that time it planned to sell 4.4 million shares at a range of $8 to $10. The company will list on the Nasdaq market under the symbol TNGN. Piper Jaffray and Leerink Swann were the lead underwriters. Tengion is the fifth life sciences company to go public in the United States so far this year [see An Open Window].

Over a dozen biotech companies have filed to go public with the U.S. Securities and Exchange Commission [see Project Runway]. Kips Bay Medical (NASDAQ:KIPS), a medical device company developing a technology for coronary artery bypass grafting, filed with the SEC to go public with plans to raise $57.5 million. Jefferies will be the lead underwriter. The company intends to use the proceeds from its initial offering to seek regulatory approval to market its technology in the United States and elsewhere.
Several biotechs released the terms for their IPOs. Codexis (NASDAQ:CDXS), a developer of biocatalysts used in the production of pharmaceuticals and biofuels, announced plans to raise $84 million through the sale of 6 million shares priced between $13 and $15. Unlike many small drug developers, Codexis had revenues of $83 million last year, up 64 percent from 2008. Burrill & Company, the publisher of The Burrill Report, is an investor in Codexis.
Pittsburgh, Pennsylvania-based DynaVox (DVOX), a company that develops proprietary software to assist people with speech, language, and learning disabilities, announced plans to raise $150 million by offering 9.4 million shares at a price range of $15-$17. DynaVox had $105 million in sales last year, and plans to list on the Nasdaq market under the symbol DVOX. Piper Jaffray and Jefferies are the lead underwriters of the offering.
Alimera Sciences (NASDAQ:ALIM) announced the terms for its planned initial offering, hoping to raise $86 million through the sale of 6 million shares at a price range of $15 to $17. The Georgia-based biotech’s eye drug Iluvien is undergoing two late-stage trials. Alimera Sciences plans to list on the Nasdaq market under the symbol ALIM. Credit Suisse and Citi are the book-running managers for the IPO, which is expected to price during the week of April 19.
French biotech Neovacs, which had announced its intention to go public in mid-March, dropped its target in half from 20 million euros 11 million ($15 million) due to a weak interest from investors. The company, a spin-off from Pierre & Marie Curie University, is developing an immunotherapy technology. Neovacs will offer 2.3 million shares at a price range between $6.50 and $7.50 a share. The company plans to begin trading on April 21.
Several companies closed significant venture capital rounds in the first week of April. San Francisco-based Achoagen completed a $56 million series C round of financing led by new investor Frazier Healthcare Ventures, and also included new investor Alta Partners. Current investors 5 AM Ventures, ARCH Venture Partners, Domain Associates, Venrock Associates, Versant Ventures and the Wellcome Trust also participated in the financing. Achoagen is focused on the discovery and development of innovative broad-spectrum antibiotics to treat life-threatening, multi-drug resistant bacterial infections. The current financing will be used to advance multiple clinical programs, including conducting a phase 2 study in complicated urinary tract infections of ACHN-490, the company’s lead candidate for multi-drug resistant bacterial infections.
Since its founding in 2004, Achaogen has raised more than $100 million in non-dilutive funding from partnerships with government agencies such as the National Institutes of Health and Department of Defense to augment funding from venture investors, including a $24.7 million contract in 2006 with the Defense Threat Reduction Agency to develop biodefense therapies, and $26.6 million over five years from the National Institute of Allergy and Infectious Diseases to develop novel antibiotics.
Swiss biotech Biocartis raised $41.3 million in a Series B equity financing round from its current investors Aescap, Biovest, Advent Venture Partners, several Biocartis employees and Benaruca, the family investment vehicle of Biocartis' co-founder Rudi Pauwels.
Two new strategic investors from the pharmaceutical/diagnostic industry, Swiss pharma Debiopharm and Johnson & Johnson Development, also participated in the financing and both of which now have a minority stake in the company. Biocartis is a diagnostics company active in the field of personalized medicine and focused on fast, multiplexed and fully integrated molecular diagnostics based on its proprietary micro-technology and sample preparation platforms. The company will use the proceeds of the financing to accelerate the development and validation of the first version of its proprietary new platforms.
South San Francisco-based Altheos completed a $20 million series A financing led by Bay City Capital with participation by new investors Novo, Canaan Partners, Life Science Angels and Atheneos Capital. Altheos is an early stage company developing a next-generation treatment for glaucoma. The financing will be used primarily for the development of ATS907, Altheos’ selective Rho-kinase inhibitor that the company licensed from Japanese pharmaceutical company Asahi Kasei Pharma. The license also includes a series of highly active compounds specifically for topical treatment for glaucoma. With this financing, Bay City Capital’s Lester Kaplan, a former executive at Allergan, will become chairman of Altheos.
Specialty pharma Sagent Pharmaceuticals raised $40 million through two tranches of a series B financing. A total of $10 million came from Zhejiang Hisun Pharmaceutical and $30 million was contributed by an unnamed China-focused private equity investment fund. Including this financing, Sagent has raised $153 million in equity capital to date. Illinois-based Sagent’s business is focused on injectable products. Hisun’s investment gives Sagent expanded access to the Chinese pharma’s extensive portfolio of active pharmaceutical ingredients and, shortly, to its finished injectable product capabilities. The financing also expands Sagent's reach into China through the Chinese investment fund's strong relationships in the rapidly maturing injectable marketplace in that region.
Diabetes garnered attention in the partnership arena. Sanofi-Aventis (NYSE:SNY) will pay up to $335 million to Delaware biotech CureDM for the exclusive worldwide license of Pancreate, a novel islet neogenesis agent for the treatment of type 1 and type 2 diabetes. Pancreate is a first-in-class human peptide therapeutic that in preclinical studies has been shown to stimulate the growth of new insulin producing islets in the pancreas, resulting in restoration of normal metabolic function and glucose control. CureDM has reached late stage preclinical development and anticipates the initiation of phase 1 clinical trials later this year. Under the terms of the agreement, CureDM will receive an upfront cash payment and success- based development, regulatory and sales performance milestone payments totaling up to $335 million. CureDM is also eligible to receive increasing royalties on worldwide product sales.

Hayward, California-based MicuRx Pharmaceuticals and its Chinese partner Cumencor Pharmaceuticals entered into research partnership with Pfizer (NYSE:PFE) to discover and develop antibiotics for drug-resistant tuberculosis in China. Cumencor Pharmaceuticals is a China-based biotechnology company applying MicuRx's proprietary technology platform to discover and develop novel antibiotics for MDR-TB. Under the terms of their agreement, Pfizer will provide an upfront payment, funding for the discovery and preclinical development of novel antibiotics to treat MDR-TB, and payments linked to the development and commercialization (including royalty payments on sales) of any antibiotics developed through the collaboration. All collaboration research will be conducted at the ZhangJiang High-Tech Park in Shanghai, China.

Financings Announced the Week Ending April 9, 2010:

Global Venture Financings
Company Location Amount Raised ($M)
Principal Focus
Selecta Biosciences Watertown, MA $15.00 Drug delivery
Achaogen San Francisco, CA $56.00 Antibiotics
MedVentive Waltham, MA $10.00 Improved patient care
Altheos South San Francisco, CA $20.00 Opthalmic
Amplyx Pharmaceuticals San Diego, Ca $1.50 Small molecule drugs
Biocartis Lausanne, Switzerland $41.30 Personalized medicine
Sagent Pharmaceuticals Schaumburg, IL $40.00 Specialty pharma

Grants and Contracts

Funding/Contracting Agency
Amount ($M)
Principal Focus
Biocompatibles Interantional Biomedical Materials, Center for Translational Molecular Medicine, Top Institute Pharma $8.40 Drug delivery
Myriant Technologies US DOE $50.00 Biorefinery
Inovio biomedical (NYSEMKT:INO)
Pennsylvania Dept of Health $2.80 DNA vaccines
Total Grants and Contracts $61.20

Public Financings

Raised $M

Financing Type
Tengion TNGN $30.00 IPO
Lipoxen (United Kingdom) LSE:LPX $1.50 PIPE
Cell Therapeutics CTIC $20.00 PIPE
Micro Identification Technologies MMTC $0.50 PIPE
PharmAthene PIP $2.50 PIPE
Ardea Biosciences RDEA $77.10 Follow-on
Valeant Pharmaceuticals VRX $350.00 Debt
Patheon (Canada) TSX:PTI $280.00 Debt
Galapagos (Belgium) GLPG.BR $3.20 Warrant exercise
Transdel Pharmaceuticals OTC:TDLP $1.00 Private debt financing
Generex Biotechnology OTCPK:GNBT $0.95 Common stock purchase agreement
Cerus Corporation CERS $10.00 Growth capital credit facility
Ex-US $284.70


Deal Value
in $M

CareFusion Medegen $225.00 Medical devices
Accelryx Symyx Technologies $485.00 Scientific Informatics
Fate Therapeutics Verio Therapeutics (Canada) n/a Stem cell therapies
Life Technologies GeneArt (Germany) n/a Gene synthesis
Company/Licensee Company/Licenser Deal Value
in $M
CancerGuide Diagnostics Duke University n/a Diagnostics License and collaboration
VLST AnaptysBio n/a Autoimmune; inflammatory collaboration
TransDerm Rxi Pharmaceuticals n/a Dermatology collaboration
GlaxoSmithKline (UK) Crucell (Netherlands) n/a Malaria vaccine collaboration
Therabel Group (France) BioAlliance (France) $65.45 Drug license
Sanofi-Aventis (France) CureDM $335.00 Diabetes license
Alvogen Penwest Pharmaceuticals n/a Generics partnership
Pfizer MicuRx Pharmaceuticals/ Cumencor Pharma (China) n/a Tuberculosis partnership