Welcome to the latest edition of our weekly EuroBiotech Report. While critics of Pfizer's ($PFE) attempt to buy AstraZeneca ($AZN) spent the week celebrating a major blow to the deal, an awkward question remains: Exactly what has been "saved" from Pfizer's clutches? AstraZeneca's pipeline suggests it isn't the thriving R&D engine it and its advocates claimed. Many of AstraZeneca's jewels were discovered outside Europe, a fact that some view as evidence of the continent's "innovation malaise." A lack of funding is often cited as one cause of the problem, but European biotechs had a good week for raising money. The Irish government contributed €30 million ($41 million) to a life sciences fund, while a British cell therapy startup, Israeli biotech Enlivex and others all added cash to their coffers. For some British startups the shortage of investors is compounded by their concentration around the Cambridge-London-Oxford triangle. In a bid to show that northern England has assets to rival those of the "golden triangle" and any biocluster in Europe, the region's universities and hospitals are pooling their efforts. Bringing investors to the region is a top priority. And more. Nick Taylor (email | Twitter)
1. Europe's "innovation malaise" casts shadow over AstraZeneca showdown
2. Irish government commits €30M to Lightstone VC fund
3. U.K. joint venture grabs £10M to move cell therapy into the clinic
4. Alliance aims to make northern England a top European biocluster
5. Enlivex raises $7M as it fights other Israeli biotechs for GvHD market
And more >>
Europe's "innovation malaise" casts shadow over AstraZeneca showdown
While some AstraZeneca ($AZN) shareholders are still trying to revive a deal with Pfizer ($PFE), the popular view is that the collapse of the buyout is good for life sciences in Britain and Sweden. Yet all the furor over the need to protect sites masked an awkward question: How innovative are they?
The Financial Times used this question as a jumping-off point for a look at what it calls "Europe's innovation malaise." After AstraZeneca gave an optimistic appraisal of its pipeline to show it has the assets to grow sales in the coming years, observers noted many of the candidates were acquired from other, mainly U.S.-based, companies. AstraZeneca subsidiary MedImmune developed a handful of the compounds--although it is unclear whether they emerged from its British or North American labs--and startups based in Cambridge, England, were behind a couple.
Overall, though, the pipeline suggests AstraZeneca is as reliant on the work of third-party laboratories in California as it is on R&D in Europe. AstraZeneca's drug development difficulties--and willingness to ax R&D jobs--perhaps explain the lack of in-house discoveries, but the pipeline is light on drugs from European startups too. The disconnect in Britain--and Europe as a whole--between cutting-edge science in academia and commercial products has caused politicians across the continent headaches. A lack of funding is often cited as a barrier.
"Pension funds don't talk to startups," an anonymous early-stage venture capitalist told the FT. Some are trying to improve the situation, with Ireland's pension fund committing €10 million ($14 million) to life sciences investors and France looking to plow money back into local companies.
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| Neil Woodford--Courtesy of Invesco |
"We have this huge national savings pot, €1.3 billion in life insurance. We need this money, these billions, these hundreds of billions invested in our companies," French Economy Minister Arnaud Montebourg said at a hearing about the planned sale of part of French engineering group Alstom to U.S.-based General Electric ($GE) attended by Reuters. The deal has raised many of the same arguments as the Pfizer takeover saga, which dragged on this week despite AstraZeneca rejecting a "final" offer. While some AstraZeneca investors are unhappy about the rejection, others--notably former Invesco Perpetual fund manager Neil Woodford--have defended the decision, Bloomberg reports. - read the FT article, Reuters' piece and Bloomberg story
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Irish government commits €30M to Lightstone VC fund
The Irish government has committed €30 million ($41 million) to a life sciences fund run by Lightstone Ventures. Ireland's leaders coughed up the cash to provide a source of funding for the job-creating startups with which it wants the country's biopharma industry to be associated.
Enterprise Ireland chipped in €20 million, with the state-backed National Pensions Reserve Fund (NPRF) providing a further €10 million. The Irish contributions helped Lightstone raise $172 million, some way short of the $250 million it reportedly hoped to raise but still a sizable pot of early-stage funding. Lightstone has already plowed some of the cash back into Ireland by joining with Covidien ($COV) to provide Dublin-based medical device startup FIRE1 with Series A funding.
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| Jason Lettmann--Courtesy of Lightstone |
With Lightstone partner Jason Lettmann relocating to Ireland to head up a new Dublin office, FIRE1 should be the first of multiple investments in the country. Increasing the range of financing options available to startups is central to the government's jobs plan. "I am confident that the establishment of this fund will directly improve the chances for innovative Irish companies to access the funding, mentoring and networks they need," Irish jobs minister Richard Bruton said in a statement.
For Lightstone, the Dublin office gives it a European base to complement its sites in California, Colorado and Massachusetts. As well as looking for local investment opportunities, the Dublin office will support Lightstone's portfolio of European companies. The portfolio is currently overwhelmingly made up of U.S.-based businesses--particularly from its home state of California--but this could shift as the European office gets up to speed. - here's the government's release, NPRF's statement (PDF) and Lightstone's take
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U.K. joint venture grabs £10M to move cell therapy into the clinic
Imperial Innovations has formed a joint venture with UCL Business and Cell Therapy Catapult to take a treatment for acute myeloid leukemia to proof-of-concept. The government-backed Cell Therapy Catapult has given the project a financial footing by committing up to £10 million ($17 million) to fund development.
Imperial College and UCL developed the candidate using money from the nonprofit Leukaemia & Lymphoma Research, but with the financial and technical requirements growing as the candidate nears the clinic, the team has rethought its model. The result is Catapult Therapy CTR, a joint venture of Imperial Innovations, the technology-transfer business behind Circassia (LSE:CIR), UCL Business (UCLB) and Cell Therapy Catapult.
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| Professor Chris Bunce |
As well as chipping in capital, Cell Therapy Catapult will provide the manufacturing and clinical trial know-how needed to take the drug to Phase II proof-of-concept. A clinical trial is due to start next year. "The Cell Therapy Catapult's investment to accelerate this trial is great news for patients with these hard-to-treat blood cancers, who often do not respond to traditional drugs like chemotherapy," professor Chris Bunce of Leukaemia & Lymphoma Research said in a statement.
The treatment involves modifying a patient's T cells by gene therapy. Having been tweaked and infused back into the body, the T cells should hunt down WT1-overexpressing cells associated with acute myeloid leukemia. London's Imperial College did the early research, with UCL coming on board later. The researchers' technology-transfer representatives, Imperial Innovations and UCLB, have given patents to the joint venture in return for late-stage milestones and possible royalties. - read the release
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Alliance aims to make northern England a top European biocluster
In the years since the failure of Renovo's antiscarring drug blew a hole in Manchester's biotech sector, northern England has fallen behind the much-feted trinity of Cambridge, London and Oxford in public perceptions. Now, 16 universities and healthcare bodies are trying to establish the north's credentials by joining to formalize a cluster they claim rivals anything in northern Europe.
The result is the Northern Health Science Alliance (NHSA), a coalition of 8 universities with research income of £740 million ($1.2 billion) and 8 healthcare bodies with almost 15 million patients, the Financial Times reports. Together the partners want to form a supraregional life sciences and healthcare system spanning from Liverpool, Manchester and Sheffield to Durham, Newcastle and beyond. Northern England is increasingly looking to link capabilities at cities across the region to counter the flow of cash and talent to the southeast of the country.
AstraZeneca ($AZN), Novartis ($NVS) and others have a presence in northern England--which NHSA claims accounts for almost half of the United Kingdom's pharma exports--but manufacturing is more prevalent than R&D. AstraZeneca's decision to relocate its R&D from near Manchester to Cambridge, but invest in manufacturing in the northwest, is indicative of the geography of bioscience in the U.K. By better coordinating the north's collective assets--which include the cancer clinical trials hub in Manchester--NHSA hopes to develop and validate more technology in the region.
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| Andrew Mitchell--Courtesy of North East Finance |
This will require investment, an area in which the southeast of England has a clear lead. Andrew Mitchell, CEO of North East Finance, told the FT the costs of drug discovery generally put biotechs beyond its reach, with the fund viewing £500,000 as its sweet spot. NHSA recognizes the problem and lists working closely with investors as one of its goals. As reported last week, AstraZeneca's exit from Alderley Park is set to provide an additional source of funding, with the site's new owner trying to raise £40 million.
If successful, Alderley Park could become the source of more innovation than at any time during the 40 years AstraZeneca occupied the site. "Big pharma likes to build glass palaces but very little comes out of them. They are full of people who think the same," Antony Odell, managing director of York-based Tissue Regenix, said. Regenerative medicine startup Tissue Regenix is one of the north's success stories. Having had a staff of two just 6 years ago, the company now employs 60 people and has a U.S. subsidiary. - read the FT's feature
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Enlivex raises $7M as it fights other Israeli biotechs for GvHD market
Enlivex Therapeutics has raised $7 million (€5.1 million) from a group of investors led by the CEO of Opko Biologics. Having secured the funding, Israel-based Enlivex plans to move its treatment for graft-versus-host disease (GvHD) into late-phase clinical trials.
The treatment, a cell immunotherapy called ApoCell, was granted orphan drug status by FDA last year and already has Phase IIa data in hand. Globes reports Enlivex is now readying to advance ApoCell into the next phase of development, with the $7 million convertible loan it secured this week from a group of investors led by Opko Biologics ($OPK) CEO Shai Novik financing the move. Hadasit Bio Holdings (TASE: HDST), which before the $7 million investment owned 92% of Enlivex, began looking for financing earlier this year.
As of February, Hadasit Bio was looking for at least $3.5 million of outside investment to equip Enlivex to begin preparing for an IPO in the U.S. If Enlivex goes ahead with the plan despite the downturn in the fortunes of biotech stocks, it will join some of its Israeli competitors for the GvHD sector on the U.S. markets. Israeli biotechs Gamida Cell, Kamada ($KMDA) and Pluristem Therapeutics ($PSTI) are also developing treatments for the disease.
Osiris Therapeutics ($OSIR) has already won approval for a GvHD treatment--a stem cell therapy discarded by Sanofi ($SNY) in its takeover of Genzyme--in some small markets but has hit roadblocks in others. The travails have left an opening Enlivex and its Israeli peers are trying to fill. - read Globes' article
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Buyout rumors sent Santhera Pharmaceuticals' (SWX:SANN) stock price up more than 100% in two days trading. The rumors started after Santhera posted positive Phase III data for its Duchenne muscular dystrophy (DMD) drug, Finanz und Wirtschaft reports. Cash has been a concern for Santhera, but at this week's annual meeting, Chairman Martin Gertsch said the company can be financed using authorized and conditional capital, money from licensing deals and sales of Raxone. Santhera also reported the secondary endpoints from its DMD trial. Finances | DMD data | Finanz und Wirtschaft (German)
Russian billionaire Roman Abramovich's investment firm plans to buy 50% of St. Petersburg-based biosimilar developer Biocad, Bloomberg reports. OAO Pharmstandard, Russia's biggest drugmaker, will take a 20% stake in Biocad, which is developing copies of Rituxan, Herceptin, Avastin and other biologics. Amgen ($AMGN) and Pfizer ($PFE) reportedly looked at Biocad last summer, at which time it was valued at as high as $1 billion (€730 million). FiercePharma | Bloomberg
British biotech Kymab raised $40 million (€29 million) from the Wellcome Trust and Bill and Melinda Gates Foundation to develop its pipeline of antibodies and expand its vaccine antigen discovery work. Kymab spun out of Wellcome Trust Sanger Institute in 2009 and raised £20 million the following year. FierceBiotech
The Dutch government made €8.6 million ($11.7 million) available to two local biotechs. Mucosis received a €5 million credit line to fund clinical development of its respiratory syncytial virus vaccine, while Lanthio Pharma got access to €3.6 million for its pulmonary fibrosis treatment. The loan is around one-third of what Lanthio needs to gather Phase II proof-of-concept data. Mucosis | Lanthio
Israeli biotech Kamada ($KMDA) suffered its biggest ever share price plunge, with news of the Phase III failure of its alpha-1 antitrypsin deficiency drug sending the stock down 36% in Tel Aviv. Kamada still plans to file for approval in Europe, but analysts have big doubts about whether the company has the data to convince regulators. Bloomberg | FierceBiotech
French gene therapy startup Lysogene snagged €16.5 million ($22 million) in a Series A round led by Sofinnova Partners. Lysogene will use the cash to expand trials of its treatment for Sanfilippo syndrome--which already has data from a Phase I/II trial--and advance a second product targeting a genetic central nervous system disease. FierceBiotech | Release
Wilex gave a handful of cancer drugs back to UCB as part of its exit from clinical activity. FierceBiotech
Israeli biopharma Neuroderm filed confidential IPO papers, Globes reports. The company, which has Parkinson's disease candidates in the clinic, submitted the documents 6 weeks ago. With the IPO market having cooled, it is unclear when Neuroderm will fully commit to going public. Globes
A clutch of European orphan drug developers reported positive news. The FDA granted MorphoSys' leukemia drug, Hybrigenics' candidate for the same indication and Nordic Nanovector's lymphoma therapy orphan status, while the German subsidiary of Proteo raised $4.8 million (€3.5 million) to advance its treatment for a complication of esophageal cancer surgery. MorphoSys | Hybrigenics | Nordic Nanovector | Proteo
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Read previous editions of the EuroBiotech Report here.
