Private Biotechs Take Different Avenues to Rake in Cash

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by: The Burrill Report

By Marie Daghlian

Reata Pharmaceuticals is filling its coffers ahead of late stage trials with a lucrative deal for its mid-stage treatment for chronic kidney disease. The private Irving, Texas-based biopharma is granting Abbott Laboratories (NYSE:ABT) exclusive rights to develop and commercialize bardoxolone outside the United States, excluding certain Asian markets. In return, Reata will receive $450 million in upfront and near-term payments, and a minority equity investment in the company.

Under the terms of the agreement, Reata will be eligible for additional unspecified milestone payments and royalties on any future product sales. The deal also gives Abbott licensing rights to other compounds in Reata’s pipeline for chronic kidney disease, and for cardiovascular and metabolic indications, in the licensed territories.

“This partnership allows us to meet our strategic goal of establishing our own commercial presence in the United States and building a sustainable, fully integrated pharmaceutical company,” says Warren Huff, CEO of Reata.

With this deal, Reata has brought in more than $500 million in the past year, including licensing the rights to develop and commercialize bardoxolone in Japan and certain Asian markets to Kyowa Hakko Kirin for $35 million upfront last January, and completing a $78 million private equity financing in July.

Bardoxolone is an oral, first-in-class antioxidant inflammation modulator that was originally developed as a cancer treatment. However, in one study researchers noticed a marked improvement in kidney function among all renal cancer patients. The company decided to focus on this aspect and mounted two mid-stage trials in 2008, which were completed last year. Results showed bardoxolone significantly improved kidney function in patients with advanced chronic kidney disease and type 2 diabetes.

Chronic kidney disease currently affects more than 50 million adults worldwide, and the number of patients is rapidly increasing throughout the world—making the drug a potential blockbuster.

Medical device company Asthmatx’s agreed to be acquired by Boston Scientific (NYSE:BSX) in a structured deal worth as much as $443.5 million. Boston Scientific is paying $193.5 million cash upfront and up to $250 million contingent upon achievement of specified revenue-based milestones through 2019.

Asthmatx designs, manufactures and markets a less-invasive, catheter-based bronchial thermoplasty procedure for the treatment of severe persistent asthma in adults whose asthma is not well controlled with drugs. The company received U.S. Food and Drug Administration approval to market its system in April.

Other biotechs garnered their cash from VCs. Immatics Biotechnologies raised $71 million in a series C financing round from Dievini Hopp Biotech, Wellington Partners and other existing shareholders, and new investors MIG-advised funds and AT Impf. The money will allow the company to start a late-stage trial of its lead therapeutic cancer vaccine candidate in renal cell carcinoma, and continue development of its pipeline of therapeutic vaccines. Immatics presented mid-stage results at the ASCO meeting in June.
immatics' technology platform rapidly generates defined therapeutic cancer vaccines which are based on multiple tumor-associated peptides with the ability to specifically stimulate the immune system against cancer cells. Based in Tuebingen and Munich, the German biotech has raised more than $130 million in private equity in three financing rounds.
Santa Barbara-based CytomX Therapeutics completed a $30 million series B round of financing led by Third Rock Ventures, with participation from the Roche Venture Fund. The money will enable the company advance its Probodies antibody platform and expand its current team of eight and move to the San Francisco Bay area by the end of the year. The company hopes to develop more effective and less toxic therapies for severe illnesses such as cancer and inflammatory diseases.

The U.S. government is another source of funding, especially for companies developing solutions to bioterror threats. Emergent BioSolutions (NYSE:EBS) signed a five year contract with the Biomedical Advanced Research and Development Authority of the Department of Health and Human Services, valued at up to $186.6 million for the development of a recombinant protective antigen anthrax vaccine.

The contract consists of a two-year base period of performance valued at approximately $51 million, three successive one-year option periods valued at approximately $126 million, and funding for optional non-clinical studies valued at approximately $9 million.

Emergent's anthrax vaccine candidate is a purified recombinant protective antigen protein formulated with an alum adjuvant and is designed to induce antibodies that neutralize anthrax toxins. The company has already received two research and development grants valued at $100 million for development of the vaccine from the National Institute of Allergy and Infectious Diseases. The company also markets the only approved vaccine for the prevention of anthrax infection.

Deals for the Week Ending September 27, 2010

Global Venture Financings
Company Location Amount Raised (USD M)) Principal Focus
immatics biotechnologies Tuebingen, Germany 71.0 Cancer vaccines
CytomX Therapeutics Santa Barbara, CA 30.0 Antibodies
Phenex Pharmaceuticals Heidelberg, Germany 22.4 Autoimmune therapeutics
Nora Therapeutics Owings Mill, MD 14.8 Women's health
NewBridge Pharmaceuticals Dubai, United Arab Emirates 12.0 Pharmaceuticals
Cylene Pharmaceuticals San Diego, CA 12.0 Cancer therapeutics
Boston Heart Lab Framingham, MA 10.0 Cardiovascular medical devices
Arterial Remodeling Technologies Paris, France 8.5 Bioresorbable stents
S*BIO Singapore 5.0 Cancer therapeutics
MemfoACT Norway 4.3 Renewable fuels technology
Cardoz Stockholm, Sweden 3.3 Cardiovascular therapeutics
Q Chip Cardiff, United Kingdom 3.1 Microfluidics
Chronix Biomedical San Jose, CA 1.8 Biomarkers
FluimediX Taastrup, Denmark N/A Point-of-care diagnostics
Total Raised US 68.6
Total Raised Non-US 129.6
Grants and Contracts
Company Funding/Contracting Agency Amount Raised (USD M) Principal Focus
Grants
Renewable Algal Energy US DOE Small business Phase III Xlerator 3.0 Renewable fuels
KSE US DOE Small business Phase III Xlerator 1.0 Renewable fuels
Semprus Biosciences National Science Foundation 0.5 Surface modification
TiGenix (Belgium) UK National Institute for Health Research 1.3 Biomaterials
Signum Biosciences NIH NIAMS SBIR 0.7 Skin disorders
Biosearch Technologies U.S. DoD Phase II SBIR 0.8 Oligonucleotides
QR Pharma NIH National Institute on Aging 0.2 Alzheimer's disease
GeneGo National Institute on Drug Abuse N/A Systems biology
Sophic Systems Alliance National Cancer Institute 0.8 Personalized medicine
W. R. Grace US Department of Energy 3.3 Biofuel technology
PTC Therapeutics FDA Office of Orpan Products Development 1.6 Cystic fibrosis
Cerus US Department of Defense 1.4 Hematology
Advanced Targeting Systems National Cancer Institute 3.0 Cancer pain
Contracts
Emergent BioSolutions HHS BARDA (contract value $186.6 million) 51.0 Anthrax Vaccine
Peregrine Pharmacetuicals US DoD DTRA 2.4 Cancer therapeutics
Rapid Micro Biosystems HHS BARDA (contract value $6.7 million) 2.2 Microbial detection
Total Grants and Contracts 73.2
PUBLIC FINANCINGS
Company Ticker Amount
Raised (USD M)
Financing Type
Immunovaccine (Canada) TSX-V:IMV 7.2 PIPE
Dynavax Technologies DVAX 2.0 PIPE
Anthera Pharmaceuticals
ANTH 31.5 PIPE
Genesis Biopharma OTC:BNGP 0.7 PIPE
New Generation Biofuels NGBF 0.5 PIPE-RDO
Oncothyreon ONTY 14.9 PIPE
NPS Pharmaceuticals NPSP 47.5 Follow on
Amgen AMGN 1,500.0 Debt
Valeant Pharmaceuticals VRX 1,200.0 Debt
Vertex Pharmaceuticals VRTX 375.0 Debt
Warner Chilcott (Ireland) WCRX 500.0 Debt
MethylGene (Canada) TSX:MYG 15.0 Equity line facility
Movetis (Belgium) Euronext:MOVE 2.9 Warrant exercise
Pernix Therapeutics PTX 10.0 Credit facility
Curaxis Pharmaceutical OTC:CURX 25.0 Equity line facility
Miraculins (Canada) TSX-V:MOM 0.9 Warrant exercise
Aradigm OTC:ARDM 0.9 Warrant exercise
Renewable Energy Group Private 8.0 Strategic investment by ARES
TOTAL PUBLIC FINANCINGS-US 3,216.0
NON-US 526.0
M&A
Acquirer Target Deal Value
(USD M)
Focus
Boston Scientific Asthmatx 443.5 Respiratory medical devices
Warner Chilcott (Ireland) Novartis (Switzerland) 400.0 Drug rights
Prestige Brands Blacksmith Brands 190.0 OTC products
Meda (Sweden) BioPhausia (Sweden) 28.0 OTC products
Elder Pharmaceuticals (India) NeutraHealth (United Kingdom) 15.0 Generics
Amedica US Spine N/A Medical devices
Royal DSM (Netherlands) Microbia (Ironwood Pharma) N/A Industrial/Ag
NeoStem Progenitor Cell Therapy N/A Stem cells
Alliances
Company/Licensee Company/Licenser Deal Value
(USD M)
Focus
Tenaska BioFuels BlueFire Renewables 500.0 Renewable fuels contract
Fiberight TMO Renewables (United Kingdom) 500.0 Renewable fuels contract
Abbott Laboratories Reata Pharmaceuticals 450.0 Renal drug marketing rights
RHEI Pharmaceuticals (China) Access Pharmaceuticals 30.0 Cancer drug supply agreement
Lundbeck (Denmark) Intomics (Denmark) N/A Bioinformatics collaboration
GlaxoSmithKline (United Kingdom) Dendreon N/A Cancer vaccine supply agreement
GlaxoSmithKline (United Kingdom) Delphi Genetics (Belgium) N/A Technology license
RXi Pharmaceuticals EyeGate Pharma N/A Ocular drug delivery collaboration
Array BioPharma Signal Genetics N/A Companion Dx partnership
Stryker Vision Sciences N/A Medical device supply agreement
Thermo Fisher Scientific Proteome Sciences N/A Biomarkers collaboration
Pfizer Icagen N/A Pain therapeutics deal extension
Royal DSM (Netherlands) Crucell (Netherlands) N/A Biobetter proteins joint venture
Royal DSM (Netherlands) DuPont N/A Biomaterials joint venture
BASF (Germany) Solix Biofuels N/A Renewable chemicals collaboration
Diaceutics London Genetics (United Kingdom) N/A Personalized medicine partnership
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