Dutch VC opens €65M cancer fund, Affimed IPO falls short, Evotec begins legal action

Welcome to the latest edition of our weekly EuroBiotech Report. Cash-starved European cancer startups had reason to cheer this week when Aglaia Biomedical Ventures revealed a new, €65 million ($84 million) oncology fund. The Dutch VC shop plans to invest the cash pool--which could rise to €100 million--in up to 15 early-stage biotechs. Affimed Therapeutics ($AFMD) had less success raising money. The German immuno-oncology biotech raised $56 million (€43 million) in its Nasdaq IPO, well short of the $75 million it hoped to pocket. Evotec (ETR:EVT) wants money too and is willing to take legal action to get what it thinks it is due. The German company committed to taking legal steps against Israel's Andromeda Biotech in relation to allegations of misconduct made by Hyperion Therapeutics ($HPTX). Our final two stories cover the pros and cons of cross-border collaboration. Ernst & Young called for Nordic life science clusters to collaborate more closely, while in the United Kingdom the industry fretted about the prospect of Scottish independence. And more. Nick Taylor (email | Twitter)

1. Aglaia creates €65M fund for early-stage European cancer biotechs
2. Affimed raises $56M in below-par IPO
3. Evotec to take legal action against Andromeda Biotech
4. E&Y calls for closer collaboration between Nordic life science clusters
5. Referendum puts spotlight on Scotland's role in U.K. life sciences

And more >>

Aglaia creates €65M fund for early-stage European cancer biotechs

Aglaia Biomedical Ventures has committed to a big ramp-up in its oncology investment plans. The Dutch venture capital shop has raised €65 million ($84 million) to invest in early-stage European oncology startups and hopes to add a further €15 million to €35 million to the fund.

Aglaia partner Karl Rothweiler

Bilthoven, Netherlands-based Aglaia already runs an oncology-focused venture fund, but the new initiative is backed by a much bigger pool of money. The Netherlands Enterprise Agency lists the investment budget of Aglaia's original oncology fund at €8 million. Aglaia is aiming to raise up to €100 million for its second stab at cancer startup investing. The new fund is expected to finance 10 to 15 oncology startups.

The jump in the size was enabled by Aglaia's growing track record in oncology investment and a loosening of the policy on who can invest in the fund. Aglaia put together its first oncology fund using cash from wealthy families. These investors have backed the new fund, but Aglaia has also opened it up to institutional investors. The wing of the European Investment Bank that provides risk financing to startups--and backed Wellington Partners' €70 million 2012 fund--made a "substantial commitment."

Having the extra financial clout will allow Aglaia to swell its portfolio. Currently, Aglaia lists 5 companies in its portfolio and has one exit to its name. The exit came in 2011 when Synthon snapped up antibody-drug conjugate specialist Syntarga. Of the companies that remain, Merus has the most high-profile admirers. The venture units of Johnson & Johnson ($JNJ), Novartis ($NVS) and Pfizer ($PFE) all contributed to the Dutch anticancer antibody developer's €31 million Series B extension. - read the release

Back to top

Affimed raises $56M in below-par IPO

Affimed Therapeutics ($AFMD) has become the latest European biotech to make a lackluster start to life on Nasdaq. The German immuno-oncology biotech raised $56 million (€43 million) by selling shares at $7 each--well below the $11 to $13 it was targeting--and saw its stock fall 17% on the first day of trading.

Affimed CEO Adi Hoess

While the IPO was less lucrative than the Heidelberg, Germany-based company hoped--after expenses it expects to pocket $49.1 million--it is still forecast to give the company enough cash to see it through the next 28 months. Having ended June with just €1.8 million in the bank, a combination of the IPO and a Series E round have given Affimed the financial clout to run midstage trials of its lead candidate--a drug for CD30+ tumor types called AFM13--in Hodgkin lymphoma.

Affimed is allocating $35 million to the Hodgkin lymphoma trials and other work related to AFM13, a sum it thinks is sufficient to move the drug toward a pivotal late-stage study. Most of the rest of the money is earmarked for preclinical and early-stage clinical tests of Affimed's two other drugs, which it is developing as treatments for non-Hodgkin lymphoma, acute lymphocytic leukemia and solid tumors. 

The pivotal trial of AFM13 isn't expected to start until 2017 at the earliest, leaving the company and its investors years away from steady revenue. Other European biotechs with similarly distant hopes of profitability have also struggled to woo public investors, but the flow of IPO hopefuls continues. Rehovot, Israel-based NeuroDerm is among the next batch of biotechs to try their luck. - read the final prospectus, Renaissance Capital's coverage and FierceBiotech's NeuroDerm piece

Back to top

Evotec to take legal action against Andromeda Biotech

Evotec (ETR:EVT) is to begin legal proceedings against Andromeda Biotech in a bid to recover alleged claims and damages. Confirmation that the German biotech is willing to push the matter comes 10 days after Hyperion Therapeutics ($HPTX) first publicly alleged that staff at Andromeda Biotech had manipulated trial data.

Evotec CEO Werner Lanthaler

At the time of the allegations Evotec said it was in talks about getting a €3.4 million ($4.4 million) milestone payment and was confident it would receive the cash. The wording of the latest statement is more aggressive, with Evotec committing to taking "legal steps" to recoup the claims and damages it thinks it is due as a result of alleged "fraudulent activity" at Andromeda. As well as potentially missing out on the milestone, Evotec expects to record an impairment charge of €8.7 million.

The sums are large enough to threaten Evotec's profit targets and have caused its stock to sink. News of the legal action sparked a slight recovery, but the price is still well down compared to earlier in the year. At this stage it is unclear how much--if any--money Evotec can claim, how long it will take and what it will cost the company. When Hyperion made the allegations it was unsure whether it made financial sense for it to take legal action against Israel's Andromeda.

Evotec is in a slightly different situation than Hyperion. Its involvement with the drug at the center of the scandal began in 2010 when it bought fellow German drug developer DeveloGen. The deal positioned Evotec to receive milestones as the drug progressed but gave it no say in its development. Evotec claims neither its team nor DeveloGen have had any involvement with the candidate since the latter sold it to Andromeda in 2007. - read the release

Back to top

E&Y calls for closer collaboration between Nordic life science clusters

An Ernst & Young report into the Nordic life science sector has called for clusters in Denmark, Finland, Norway and Sweden to collaborate more closely. The thinking behind the idea is that by combining their respective strengths the clusters can create an environment attractive enough to slow the drain of biotechs and talent to the U.S.

Financing constraints at home are the main motivation for Nordic biotechs to become increasingly U.S.-centric organizations. The E&Y report found that venture capital investment has dried up over the past 5 years, with Sweden posting a series of low fundraising totals since 2009. Other Nordic nations have fared somewhat better--funds from Novo Nordisk ($NVO) and Lundbeck have ensured a source of capital for Danish startups--and this disparity in resources underpins E&Y's call for intercluster collaborations.

With Sweden possessing a strong research base, Norway offering tax breaks on R&D investments and Denmark providing favorable regulations, the countries can collectively present an enticing package to biotechs. Individually they all have weaknesses though. Working more closely could enable Norwegian startups to benefit from Sweden's medical and research infrastructure, for example. Representatives of AstraZeneca ($AZN) and the Karolinska Institutet were among the people to tell E&Y of the need for closer collaboration. - read the report

Back to top

Referendum puts spotlight on Scotland's role in U.K. life sciences

The runup to this week's referendum on whether Scotland should remain in the United Kingdom was filled with reports on how various sectors on both sides of the border would cope with the split. In life sciences the loudest voices claimed Scotland and the rest of the U.K. were best served by sticking together.

A panel discussed the topic at an event attended by PMLiVE. "In order to compete nationally, we need to be at one as a nation. It is possible to boost economic growth through life sciences. I travel north often and can see the promise the north has to offer outside of the 'golden triangle' of Oxford, Cambridge and London," Dr. Eliot Forster, executive chair of London's MedCity, said. Another speaker also said the focus on the "golden triangle" does Scotland and the rest of the U.K. a disservice.

George Freeman

Fast approval times and established patient registries have helped Scotland attract clinical trials. Last year Pfizer ($PFE) chose Scotland as the location for its second U.K. preferred trial site--the first is across the border in Newcastle--and the country has a strong biopharma services sector. PMLiVE reports that 150 biopharma services businesses have a base in Scotland. And U.K. life sciences minister George Freeman said the government spends £400 million ($650 million) a year on Scottish studies.

Freeman also used the event as a platform to discuss his plans for strengthening ties between industry and the National Health Service (NHS). "I don't think anyone would say the NHS is a catalyst for health innovation. We are still not good enough at adopting innovation into industry, especially within the NHS," Freeman said. - read PMLiVE's Scotland article and its NHS innovation piece

Back to top

Of Note:

The University of Nottingham committed to rebuilding the GlaxoSmithKline ($GSK)-funded sustainable chemistry laboratory that burnt down this week. GSK gave the university a £12 million ($20 million) grant for the building. The Construction Index

The European Medicines Agency (EMA) published a Q&A document explaining its adaptive licensing pilot project. The pilot allows EMA to rejig the approval process to get new drugs to restricted patient populations sooner. Release

Moberg Pharma's (OMX:MOB) nail fungus treatment met its primary endpoint in a Phase II trial. The Swedish biopharma is in talks to find a partner for further development and commercialization of the drug. Release

MGB Biopharma raised £4 million ($6.5 million) to move its lead antibacterial into the clinic. Glasgow, Scotland-based MGB is developing the product to work against Clostridium difficile and other Gram-positive infections. Release

Pluristem Therapeutics ($PSTI) revealed plans to commercialize its placenta-based cell therapies in Japan. The Israeli biotech thinks a change in the law in Japan has created a fast track to market for its products. Release

MorphoSys (FSE:MOR) received a grant to develop antibodies against two undisclosed G protein-coupled receptors. The €1 million ($1.3 million) grant is expected to cover early drug development. Release

E-Therapeutics (AIM:ETX) is looking for funding to restart development of its candidate against Clostridium difficile. The funding would allow e-Therapeutics to develop the anti-infective alongside its drugs for cancer and major depressive disorder. Insider Media

The United Kingdom's Medicines and Healthcare products Regulatory Agency (MHRA) awarded Northwest Biotherapeutics' ($NWBO) cancer vaccine DCVax-L Promising Innovative Medicine status. DCVax-L is the first product to receive the designation, which is the first of two steps in the U.K.'s early-access scheme. FierceBiotech

CellProThera struck a deal with BioCardia to access a drug delivery system for its CD34+ stem cells. The French biotech will pay milestones to BioCardia for future clinical developments. Release

Israel's Avraham Pharmaceuticals raised $4.5 million (€3.5 million) from a handful of investors to finance a Phase IIb study of its treatment for mild cognitive impairment and the early stages of Alzheimer's disease. Release

Germany's CureVac struck a $600 million deal with Boehringer Ingelheim. The cancer vaccine company will receive $45 million upfront in exchange for global commercial rights to the lung cancer candidate. FierceBiotech

Back to top

Brought to you by:

Suggested Articles

Preclinical-stage biotech Abpro Therapeutics wants to trial its two lead candidates for HER2-positive cancers and diabetic macular edema in 2019.

After a rough patch in 2017, the stars seem to be realigning for French CAR-T expert Cellectis, which just closed a $164 million U.S. public offering.

Investment firm Frazier Healthcare Partners has closed its 11th fund—worth $780 million—that will help established companies accelerate their growth.