Biotech Posts Strong Gains - Strong pipelines, approvals, and deals drive up market cap. - BioPharm International

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Biotech Posts Strong Gains
Strong pipelines, approvals, and deals drive up market cap.


BioPharm International
Volume 24, Issue 7, pp. 20-21

PARTNERING STILL REMAINS HOT


Table I: Performance of biotech initial public offerings (IPOs) completed in 2011.
Following on from the record amount of partnership dollars generated by US biotechs in 2010, the first quarter of 2011 saw a further $7.5 billion being raised through partnership deals.

One of the top deals in annouced value was Aveo Pharmaceuticals, which signed a major cancer drug licensing deal with Astellas Pharma that netted the biotech $125 million upfront and could be worth more than $1.3 billion if all milestones are met. Their experimental drug, tivozanib, is currently in a late-stage trial as a treatment for advanced renal carcinoma, and in other studies as a treatment for other solid tumors. It is designed to optimally block the vascular endothelial growth factor (VEGF) pathway by inhibiting all three VEGF receptors, for the treatment of a broad range of cancers.


Table II: Burrill biotech indices.
Another of the top deals is the collaboration between Takeda Pharmaceuticals and Intra-Cellular Therapies. The two companies are teaming up in a worldwide collaboration worth up to $750 million. The companies will develop and commercialize Intra-Cellular Therapies' preclinical selective phosphodiesterase type 1 (PDE1) inhibitors for the treatment of cognitive impairment associated with schizophrenia. ITI's PDE1 inhibitors are orally available and have potential to be treatments for a variety of psychiatric and neurological diseases.

QUIET PERIOD FOR INITIAL PUBLIC OFFERINGS

Only three US biotech companies priced initial public offerings (IPOs) during the past three months:

  • Specialty pharmaceutical company, Sagent Pharmaceuticals sold 6.6 million shares including over-allotments at $16.00 per share, which was at the high end of their projected $14 to $16 share price range. Since its formation in 2006, Sagent has developed an extensive portfolio of injectable pharmaceutical products.
  • For its IPO, Tranzyme Pharma priced 13.5 million shares at $4.00 per share. The North Carolina biotech had hoped to debut mid-March in the $11 to $13 per share range, but its underwriters couldn't get any traction for the offer until they slashed the price more than two thirds and tripled the number of shares offered. Tranzyme is a clinical-stage biopharmaceutical company focused on discovering, developing and commercializing novel, first-in-class small-molecule therapeutics for the treatment of acute (i.e., hospital-based) and chronic gastrointestinal motility disorders.
  • South San Francisco-based Solazyme, which transforms plant-based sugars into petroleum-based chemicals and fuels, raised $198 million by offering 10.975 million shares at $18, above the range of $15 to $17. The company had originally planned to offer 9.975 million shares, with the upside coming from additional primary shares; in total, the company raised 24% more than originally planned.

There now have been 10 US biotech IPOs since the beginning of the year. Their improving performance is reflective of biotech's better fortunes in parallel with the strengthening of the capital markets. The IPO runway is full and it is likely we will see several more biotech companies complete their IPOs in the coming months, although to get the deals done they may have to modify their pricing strategies to offer a lower price and sell more shares, as was the case for Tranzyme.

G. Steven Burrill is chief executive officer at Burrill & Company, San Francisco, CA, 415.591.5400,
.


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