Welcome to the latest edition of our weekly EuroBiotech Report. The last week of July was a massive one for European biotech IPOs, with BioBlast Pharma ($ORPN), Innocoll ($INNL), Macrocure ($MCUR), Mapi Pharma and VBL Therapeutics ($VBLX) all heading to the Nasdaq. All of the companies struggled though. Mapi Pharma postponed its listing--and halved its fundraising goal--and the other four priced their offerings at the bottom of their ranges or below. While investor sentiment towards biotech as a sector has soured somewhat in recent months, individual companies continue to do well. French biotech Cellectis (EPA:ALCLS) is up 140% over the past three months, with this week's deal to offload its Swedish stem cell subsidiary adding to the share price gains that followed the alliance it struck with Pfizer ($PFE). The sale of the stem cell subsidiary leaves Cellectis heavily dependent on the success of the CAR-T technology that underpins the Pfizer partnership. Spain's Almirall (BME:ALM) is set to undergo a similar, albeit more dramatic, transformation after agreeing to sell its respiratory business to AstraZeneca ($AZN) for up to $2.1 billion (€1.6 billion). The sale will see drugs that account for 30% of Almirall's sales and half of its pipeline transferred to AstraZeneca, a situation the Spanish drugmaker is tipped to respond to by acquiring dermatology assets and retaining its commitment to R&D. Finland's Biotie Therapies decided to advance its formerly UCB (EBR:UCB)-partnered Parkinson's drug into Phase III alone. And more. Nick Taylor (email | Twitter)
1. Buzz: Almirall hunting for dermatology assets after striking AstraZeneca deal
2. European biotechs stumble through IPO window
3. Cellectis to sell stem cell subsidiary to focus on CAR-T
4. Israel's Mapi Pharma downsizes and delays IPO
5. Biotie to tackle PhIII Parkinson's trial solo after UCB returns drug
And more >>
Having struck a deal to sell its respiratory business to AstraZeneca ($AZN) for up to $2.1 billion (€1.6 billion), Almirall (BME:ALM) must now plan for life without the drugs that generated 30% of its sales. And according to analyst and media reports, that means the Spanish drugmaker will hunt for dermatology deals while continuing to invest in R&D.
|Almirall's German inhalation center|
Almirall moved to bolster its dermatology unit late last year when it struck a $380 million deal to buy Aqua Pharmaceuticals, but respiratory remains its main money spinner and accounts for half of its pipeline. By the end of the year, AstraZeneca is set to buy these commercial and development-stage respiratory drugs, leaving Almirall with two dermatology candidates and a pain treatment in its clinical pipeline.
In response, Almirall is reportedly planning to reposition itself as a speciality dermatology company and strengthen its pipeline. "Almirall now plans to accelerate its transition to becoming a global dermatology company but envisages R&D to remain a key part of its business model," Jefferies analyst Peter Welford wrote in a note to investors. Reuters quotes an anonymous source as saying Almirall is also likely to add dermatology assets through small acquisitions and licensing deals.
Almirall shares rose 8% following news of the AstraZeneca deal, which arrived the day after the Spanish drugmaker published results for the first half of 2014. The financial release included news that FDA has asked for a 24-week clinical trial to support the refiling of aclidinium+formoterol, a respiratory drug combination Almirall is set to sell to AstraZeneca. Analysts viewed the FDA decision as a setback for Almirall. - read the release, Reuters' article and FierceBiotech's take
A handful of European biotechs headed to the U.S. for their IPOs this week but received a frosty reception from investors. The four companies that went ahead with their offerings priced at the low end of their ranges or below and the fifth postponed its listing.
Mapi Pharma postponed and slashed the fundraising target of its IPO--more on that story later in this edition of EuroBiotech Report--leaving fellow Israeli biotechs BioBlast Pharma ($ORPN), Macrocure ($MCUR) and VBL Therapeutics ($VBLX) to take their chances. The trio of Israeli companies--plus Ireland-headquartered Innocoll ($INNL)--hoped to collectively raise around $265 million (€198 million), but each company fell short of its target.
BioBlast came closest, hitting the low point of its $11 to $13 per range but selling slightly fewer shares than expected. The company raised $35.2 million to fund development of its clinical-stage oculopharyngeal muscular dystrophy treatment. The other three IPOs had much bigger fundraising goals. VBL Therapeutics hoped to raise more than $75 million, but brought in less than $65 million after its IPO priced just below its target range.
Macrocure and Innocoll priced well below their ranges, although the latter made up some of the shortfall by selling more shares. Having aimed to sell 5,350,000 shares for $13 to $15 a pop, Macrocure priced its IPO at $10, causing it to raise around $20 million less than expected. Innocoll priced its IPO at $9 per share, well short of the $13 to $15 it targeted, but sold 20% more than planned. The IPO raised close to $59 million, around one-quarter of which came from Sofinnova Venture Partners.
While three of the four biotechs are from Israel, observers think comments by Federal Reserve Chair Janet Yellen on biotech valuations influenced investors and IPO timings more than the fighting in Gaza. "It has more to do with the fact that the market is in bubble territory and either they go out now or they risk not [going]," Jeff Sica, president of Sica Wealth Management, told Bloomberg. - read the releases for BioBlast, Innocoll, Macrocure and VBL, plus the Bloomberg feature
French biotech Cellectis (EPA:ALCLS) is to sell its Swedish stem cell subsidiary to focus its attention on the CAR-T immunotherapies it is developing in-house and in partnership with Servier and Pfizer ($PFE). Japanese company Takara Bio is buying the stem cell assets for an undisclosed fee.
The sale comes 7 months after Cellectis began pulling back from the human embryonic stem cell sector in response to a downturn in demand for its products and services. Prior to the restructuring that began late last year, stem cell tools and services were a pillar of Cellectis' business, with the biotech calling itself "the global genome engineering specialist" and spending €18.3 million ($24.5 million) in 2009 to buy Cellartis.
A drop in demand from 2010 onward--coupled with promising data on its CAR-T candidates--prompted Cellectis to shift its focus, though. Last year depreciation and restructuring costs caused the tools and services unit to post a loss of €14 million. Details of what Takara Bio is paying for the Swedish subsidiary aren't being disclosed, but Cellectis said the transaction will register in its 2014 accounts as a €5 million loss.
|Pfizer R&D chief Mikael Dolsten|
Shedding the tools and services unit makes Cellectis look more like a typical biotech, with its hopes now resting largely on its pipeline of CAR-T immunotherapies. In June a far-reaching deal with Pfizer put the technology in the spotlight. Pfizer R&D chief Mikael Dolsten explained the motivation for the deal on the company's quarterly results call. Dolsten picked out the ability to industrialize and scale up Cellectis' approach as part of the attraction for Pfizer. - read the release and Pfizer transcript
Speculation that an Israeli biopharma would delay its Nasdaq IPO became a reality late last week when Mapi Pharma pushed back the date of its listing. But the reasons were more mundane than the war in Gaza, with Globes reporting that market conditions prompted Mapi Pharma to move the date and slash its fundraising target.
|Mapi Pharma CEO Ehud Marom|
Mapi Pharma began last week hoping to raise $37 million (€28 million) in an IPO on Thursday, but by Friday it still hadn't listed and instead downgraded its expectations to $20 million. As recently as Monday Globes thought the IPO would take place this week, but Mapi Pharma postponed its plans again. The delay and downsizing of the IPO came amid speculation that the fighting in Gaza--and particular the ban on flights to Israel--would deter U.S. investors from backing the latest crop of biotechs to emerge from the country.
While the turmoil in Israel is unlikely to have helped Mapi Pharma, Globes reports that broader market conditions--specifically Federal Reserve Chair Janet Yellen's comment on biotech valuations--were responsible for the rethinking of IPO plans. The Israeli business paper also noted that Mapi Pharma's business model may have hindered its attempts to woo Wall Street. Mapi Pharma is developing a delayed-release version of Teva's ($TEVA) Copaxone and as such falls outside of the typical biotech model.
"Mapi Pharma is not bringing a dream about a new type of medicine to its offering, while on the other hand, it does not present a well-oiled generic operation with reliable revenue and profits," Globes notes. The flip side of the argument is that Mapi Pharma may offer a lower risk path to revenue and profits than biotechs with potential for more explosive growth than generics companies. - read the Globes article and Nasdaq delay news
Over the past two years Finland's Biotie Therapies (HEL:BTH1V) has had two different partners back out of alliances, with UCB's (EBR:UCB) decision in March to hand back rights to a Parkinson's drug following a similar move by Roche ($RHHBY) in 2012. And as with the asset developed with Roche, Biotie has opted to push ahead with clinical trials of the Parkinson's candidate unpartnered.
UCB dropped the drug, tozadenant, as part of a portfolio review but Biotie continues to see potential in the candidate. In the wake of UCB's decision Biotie was considering partnering the drug--and could still if a very attractive offer arrived--but going solo into Phase III is now the most likely outcome. To fund the trial Biotie may need to add to the €34 million ($45.5 million) it currently has in cash, with a capital raise one possibility. Biotie thinks it can keep costs down by using data from an already-completed Phase IIb as part of its FDA submission.
|Biotie CEO Timo Veromaa|
"We strongly believe the already executed study can be used as a pivotal study. Then we would just need to replicate that study with the exact same endpoints in the exact same population," Biotie CEO Timo Veromaa told investors on a conference call to discuss second-quarter results. Like the Phase IIb trial, the late-stage study will recruit patients with fluctuating Parkinson's disease, but will need to enrol more subjects and run for longer to generate data capable of winning FDA approval.
Veromaa is planning to start a 24-week trial in the first half of 2015 with enough patients to give a data set of 1,500 subjects across both studies. An open-label extension trial is also planned to gather the long-term data FDA wants to see. - read the release
Sanofi ($SNY) and Regeneron ($REGN) paid BioMarin ($BMRN) $67.5 million (€50.4 million) for a priority review voucher. The French Big Pharma will use the voucher to trim the regulatory review time for cardio drug alirocumab by four months. FierceBiotech
U.S. fund Yorkville invested NIS 3 million ($0.87 million) in Medivie Therapeutics (TASE:MDVI). The Israeli company will use some of the cash--which could be supplemented by a NIS 10 million loan from Yorkville--to prepare for a migraine clinical trial. Globes
Merck Serono began a Phase II trial of its anti-PD-L1 antibody in patients with Merkel cell carcinoma. The trial is part of the German biopharma's pitch for the immuno-oncology market. FierceBiotech
Israel's BiondVax Pharmaceuticals talked up the potential of its universal flu vaccine candidate to protect against pandemic strains of bird flu after posting positive preclinical data. Globes
GSK ($GSK) CEO Andrew Witty backed plans by the British government to punish companies that fail to keep promises made in takeovers. Doubts about the government's ability to enforce commitments--such as Pfizer's ($PFE) promise to keep British R&D jobs if it buys AstraZeneca ($AZN)--led business secretary Vince Cable to look into financial penalties. FT
The European Commission approved Veloxis Pharmaceuticals' (OMX:VELO) Envarsus for preventing organ rejection in adult kidney and liver transplant patients. Italian firm Chiesi Farmaceutici will commercialize the drug in the European Union. Release
Zealand (OMX:ZEAL) entered into a preclinical pact with Boehringer Ingelheim. The Danish company will receive $7.5 million (€5.6 million) upfront and up to $395 million in biobucks from Boehringer. FierceBiotech
MorphoSys (FSE:MOR) revealed it is in line to receive royalties of up to 7% on net sales of gantenerumab, the Phase III Alzheimer's antibody candidate it developed for Roche ($RHHBY). Roche has two Phase III trials of the drug listed on ClinicalTrials.gov, neither of which is due to finish before 2018. Release
AstraZeneca ($AZN) provided an update on development of an immunotherapy it hopes will bring in $6.5 billion (€4.9 billion) a year. A Phase III trial in head and neck cancer is the next step in the strategy. FierceBiotech
Read previous editions of the EuroBiotech Report here.