Two Biotechs Fail to IPO: GM’s Offering Dwarfs All Others in Busy Deal Week

Includes: ANAC, LLY, ZGNX
by: The Burrill Report

By Marie Daghlian

Both Anacor Pharmaceuticals (NASDAQ:ANAC) and Zogenix (NASDAQ:ZGNX) failed to price this week while automaker General Motors (NYSE:GM) stole the headlines with its $20 billion IPO, an offering that could become the world’s largest initial offering if underwriters exercise their option for all of the overallotments.

Anacor has developed five molecules that are in clinical development using its boron chemistry platform, a technology that it says allows improved absorption of drugs with fewer side effects. The company has a research agreement with Eli Lilly (NYSE:LLY) for animal health products and a partnership with GlaxoSmithKline (NYSE:GSK) for anti-infectives. This is its second attempt to go public, after withdrawing its initial offering during the financial crisis of 2008. The biopharma plans to offer 4.7 million shares priced between $16 and $18 to raise up to $80 million to help fund a late stage trial of its lead therapeutic, a topical antifungal to treat nail and nail bed infections.

Zogenix, which sells a needle-free migraine drug that is delivered under the skin, had hoped to go public this week through an initial offering of 6 million shares priced between $12 and $14 per share. The company began marketing its device in January and had achieved net product revenues of $11.8 million as of the end of September.

Both companies were considered among the weakest prospects during a week when 10 IPOs were planned and their offerings have been moved to day-to-day status, which means that underwriters will price them when they can, depending on market demand.

In Europe, the anticipated IPO of Zealand Pharma was delayed by four days to November 22. The Danish biotech had hoped to raise about $140 million but cut its offering price on Thursday by 33 to 44 percent even as its CEO David Solomon told Reuters that there was broad investor interest. The company’s lead product, a type 2 diabetes drug, is partnered with Sanofi-Aventis (NYSE:SNY) with late stage data due in the coming months.

In Russia, however, Pharmsynthez, a small pharmaceutical company, raised $17.7 million through an initial public offering on the Moscow stock exchange, selling 22 million shares at the middle of its price range. The contract manufacturer aims to list on the Nasdaq in 2012 or 2013.

Eli Lilly’s corporate venture group Lilly Venture participated in two venture financings that closed during the week. It led a $24 million series C round in Cerulean Pharma, a developer of nano-drugs. All other existing investors including Polaris Venture Partners, Venrock, Lux Capital, and Bessemer Venture Partners participated in the round. The Cambridge, Massachusetts company plans to use the funds to advance its first-in-class nano-pharmaceutical into a mid-stage trial in non-small cell lung cancer. It will also use the funds to further develop its platform technology, which it says makes drugs more effective and with fewer side effects.

Lilly Ventures also participated in a $36.5 million tranched series C financing in San Francisco-based Sutro Biopharma. Skyline Ventures led the round with participation from Amgen Ventures and existing investors SV life Sciences and Alta Partners.
Sutro develops and designs novel protein therapeutics and biosuperiors that have site-directed modifications, including modifications incorporating non-natural amino acids, opening up opportunities to create protein therapeutics that cannot be produced using conventional methods.

Boston-based Verastem closed a $16 million series A financing from Longwood Founders Fund, Bessemer Venture Partners, Cardinal Partners, and MPM Capital. The company is focused on discovering and developing novel drugs that selectively target cancer stem cells.


Global Venture Financings
Company Location Amount Raised (USD M) Principal Focus
Sutro Biopharma San Francisco, CA 36.5 Biobetter drugs
Cerulean Pharma Cambridge, MA 24.0 Nanodrugs
Verastem Boston, MA 16.0 Cancer therapeutics
Cool Planet Biofuels Camarillo, CA 8.0 Industrial/Ag
Beech Tree labs Providence, RI 7.0 Drug discovery
Minerva Biotechnologies Waltham, MA 4.6 Cancer diagnostics
Kala Pharmaceuticals Waltham, MA 3.0 Therapeutics
NanoDetection Technology Cleveland, OH 2.0 Diagnostics
Plasma Technologies Corpus Christi, TX 2.0 Medical devices
BridgePoint Medical Plymouth, MN 1.0 Medical devices
Vivacta Sittingbourne, United Kingdom 6.4 Point-of-care diagnostics
RepRegen London, United Kingdom 1.6 Biomaterials
Total Raised US 104.1
Total Raised Non-US 8.0
Grants and Contracts
Company Funding/Contracting Agency Amount Raised (USD M) Principal Focus
ProtAffin Biotechnologie (Austria) Austrian Forschungs-Forderungs-Gesellschaft 3.7 COPD
Deinove (France) OSEO Innovation and others 1.8 Antibiotics
Amakem (Belgium) Flemish agency for Innovation 1.7 COPD
Selenium National Institute on Deafness and Other Communication Disorders 0.2 Antimicrobials
Stratatech NIAID Fast-Track SBIR 3.5 Tissue repair
Active Motif NIMH SBIR 0.3 Epigenetics
InteRNA (Netherlands) Agentschap Innovation Credit 1.8 Cancer
PolyMedix US Army Phase 2 STTR 0.8 Infectious diseases
Total Grants and Contracts 13.8
Company Ticker Amount
Raised (USD M)
Financing Type
Pharmsynthez (Russia) MICEX 17.7 IPO
Clavis Pharma (Norway) OSE:CLAVIS 25.7 PIPE
IS Pharma (United Kingdom) LSE:ISPH 14.5 PIPE
Stellar Biotechnologies (Canada) TSX-V:KLH 3.7 PIPE
Sernova (Canada) TSX_V:SVA 1.0 PIPE
ValiRx (United Kingdom) LSE:VAL 0.4 PIPE
NeoStem NBS 19.0 PIPE--Two concurrent offerings
BSD Medical BSDM 10.5 PIPE--RDO
Synta Pharmaceuticals SNTA 5.0 PIPE
Oxis International OTC:OXIS 0.3 PIPE
Avanir Pharmaceuticals AVNR 88.0 Follow on
Endo Pharmaceuticals ENDP 400.0 Debt
Laboratory Corporation of America LH 925.0 Debt
Valeant Pharmaceuticals (Canada) VRX 1,000.0 Debt
KV Pharmaceutical Kva/KVb 120.0 Term loan, tranched committed loan, warrants
Medizone International OTC:MZEI 10.0 CEFF
Helicos BioSciences OTC:HLCS 2.0 Convertible promissory notes
NON-US 1,063.0
Acquirer Target Deal Value
Cardinal Health Kinray 1,300.0 Pharmaceutical distributor
BTG (United Kingdom) Biocompatibles International (United Kingdom) 282.7 Oncology
Sekisui Chemical (Japan) Genzyme Diagnostics 265.0 Diagnostics
Kelun Pharmaceutical (China) Guojing Pharma 37.0 Pharmaceuticals
LeMaitre Vascular Angiotech's Lifespan Vascular Graft 2.8 Medical devices
NovAliX (France) Graffinity Pharmaceuticals (Germany) N/A Drug discovery
Cold Genesys BioSante Pharmaceuticals N/A Virus technology
Molecular Response Oncotech N/A Cancer tissue bank
Targeted Genetics Biocontrol (United Kingdom) N/A Biologics
DiscoveRx Ambit Bisociences screening unit N/A Tools/Technology
Company/Licensee Company/Licenser Deal Value
Eisai Pharmaceuticals (Japan) Forma Therapeutics N/A Drug discovery collaboration
Xenon Pharmaceuticals (Canada) Isis Pharmaceuticals N/A Anemia therapy collaboration
Physio-Control AirStrip Technologies N/A Digital health partnership
ICON (Ireland) Proteome Sciences N/A Biomarkers partnership
TapImmune Mayo Clinic N/A Vaccine technology license
Private/Public Partnerships
Company Institution Deal Value (USD M) Focus
Pfizer UC San Francisco 85 Drug development collaboration
Ingenuity Systems Sage Bionetworks N/A Bioinformatics collaboration