EU opens €24B fund to biopharma R&D, Cardio3 lands Asian investment, U.K. IPOs heat up

Welcome to the latest edition of our weekly EuroBiotech Report. A potentially huge new biopharma financing faucet was turned on this week, with the European Investment Bank (EIB) signalling its intent to use some of its €24 billion ($33 billion) fund to back drug development. UCB (EBR:UCB) is the first to benefit from EIB's move into risk-sharing investments, with the bank committing up to €75 million to fund multiple R&D programs at the Belgian biopharma. UCB's neighbour Cardio3 BioSciences (EBR:CARD) also added cash to its coffers, with Hong Kong-based Medisun International committing €20 million to a joint venture tasked with commercializing the Belgian biotech's cell therapy in China. Across the border in France, Cellectis (EPA:ALCLS) found itself a partner with spending power to rival that of the EIB: Pfizer ($PFE). The Parisian biotech is setting up shop in the U.S. after striking a deal worth up to $2.8 billion with Pfizer, but has no desire to be consumed by its Big Pharma partner. Over in Britain biotech executives are readapting to a long-forgotten feeling: confidence in their ability to raise cash from public markets. GlaxoSmithKline ($GSK) spinout Convergence Pharmaceuticals could file an IPO next year, while Cambridge-based Abzena plans to go public in July. The U.K. Medical Research Council is working with local giants AstraZeneca ($AZN) and GSK--as well as some smaller European companies--on what it claims is the world's largest study into dementia. And more. Nick Taylor (email | Twitter)

1. EU bank commits €75M to UCB in risk-sharing use of new €24B fund
2. Potential of cell therapy field helps Cardio3 lure Asian investment
3. Circassia's success gives U.K. biotechs the confidence to go public
4. Cellectis to Pfizer: We like being independent too much to be bought
5. EU biopharma given starring role alongside AZ, GSK and J&J in British dementia push

And more >>

EU bank commits €75M to UCB in risk-sharing use of new €24B fund

The European Investment Bank (EIB) has traditionally shied away from risk-sharing investments in biopharma R&D, favoring loans that limit its exposure to the pitfalls of drug development instead. That changed this week when UCB (EBR:UCB) snagged up to €75 million ($102 million) of the EIB's €24 billion innovation fund.

While the deal marks a move into higher risk-reward R&D, EIB has taken steps to avoid the binary success-failure nature of some biopharma investments. The bank has picked out 6 projects--a mix of early and late-stage candidates--for investment and will take co-ownership of the jointly developed IP. UCB will reacquire the assets at the end of the agreement. By then EIB could have received several milestone payouts from each R&D program, a model designed to limit risk by giving it multiple shots on goal. If the projects totally fail, UCB will not owe EIB money.

EIB VP Pim van Ballekom

EIB staff will sit on a joint steering committee, giving the bank a say on decisions affecting the projects in which it is investing. The bank thinks this risk-sharing approach can yield a higher return on investment than its traditional deals, while also advancing its mission to support the economic goals of the European Union. With cash being a common bottleneck for high-risk R&D in Europe, EIB has stepped up to the plate. Science Business notes that the loan deals EIB previously used to invest in innovation were criticized for favoring big companies, something the €24 billion fund has tried to correct.

The shift could mean small biotechs find it easier to access the EIB's cash than before. "We are aiming to pave the way and demonstrate that innovative financial instruments such as risk sharing co-development funding can make a difference in boosting research and innovation in Europe. This is of the utmost importance for the future of Europe," EIB VP Pim van Ballekom said in a statement. - read the press release, accompanying presentation and Science Business article

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Potential of cell therapy field helps Cardio3 lure Asian investment

Belgium's Cardio3 BioSciences (EBR:CARD) faced a tough start to life on the public markets last year, with its IPO pricing at the bottom of its range and questions about data inconsistencies causing the stock to slide. Since then the company has bounced back, though, with the boost from this week's deal with a Hong Kong investor meaning Cardio3 is up around 180% on its IPO price.

The deal sees the investor, Medisun International, commit €20 million ($27 million) to a joint venture tasked with trialing and commercializing Cardio3's cell therapy C-Cure in China, Hong Kong and Taiwan. Cardio3 has begun enrolling European patients in a Phase III trial of C-Cure--which uses a patient's own bone marrow cells to regrow heart tissue--and is now looking to expand globally. The Belgian biotech's pipeline fits with Medisun's investment priorities.

Cardio3 CEO Christian Homsy

"Medisun had been searching for an investment in cell therapies and approached us having seen us present at some congresses in Asia," Cardio3 CEO Christian Homsy told FierceBiotech. The Hong Kong investment group says it has assembled a team of people with technical and clinical experience of regenerative and cell-based medicines. And the Cardio3 deal suggests it has the financial clout to establish a foothold in the nascent Asian market for such medicines.

As well as committing €20 million over the next three years to take C-Cure through Phase III in China, Medisun is buying 8% of Cardio3's outstanding shares in a deal worth €25 million. The cash injection will fund a Phase III trial in the U.S., which Homsy expects to start towards the end of the year. FDA has already signed off on the trial. Plans in China are less advanced, with Medisun still needing to meet with local stem cell experts to promote C-Cure, after which it will submit a trial application.

The start date depends on the vagaries of the Chinese trial approval process, but with a local partner in place and "strong interest" from regulators and research hospitals, Homsy thinks the study could get underway by the end of the year. - read the joint venture release and investment news

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Circassia's success gives U.K. biotechs the confidence to go public

When Circassia (LSE:CIR) outlined its IPO plans in February, many observers were taken aback. A biotech? In Britain? Aiming for a £200 million ($339 million) IPO? Having gone through something of a biotech IPO drought, the arrival of a huge public offering in London looked improbable. Now though, with Circassia having shown the way, other British biotechs are lining up to go public.

Convergence CEO Clive Dix--Courtesy of C4X Discovery

GlaxoSmithKline ($GSK) spinout Convergence Pharmaceuticals is among the companies planning to list, with CEO Clive Dix telling Reuters it may try to raise up to £100 million from public markets early next year. Dix made the comments after sharing Phase II data on Convergence's treatment for trigeminal neuralgia, a severe form of facial pain. Until recently Nasdaq was the obvious location for a British biotech looking to go public, but now it is just one of the options being considered by Dix.

A London listing is one possibility, a state of affairs that is partly attributable to Circassia's successful IPO. "[Circassia] has given us more confidence and I think it has given the sector more confidence too. I think we are seeing a proper recovery now. This isn't just hype. There are lots of very good small company start-ups and spin-outs," Dix said. Crucially, there is also renewed interest from investors in London, which unlike the U.S. lacks specialized funds that will take a punt on biotechs.

Lingering investor concerns about the risky nature of biotech investments could help another British IPO prospect, Abzena. The British biopharma service provider expects to list on London's AIM next month. And as a revenue-generating company--last year it brought in £5.8 million--that has a business model free from the binary success-failure events that make biotechs a risky proposition, it could find favor with investors who want a safer bet.

A spokesperson for Abzena was unable to tell FierceBiotech how much the company hopes to raise, saying only that the listing will be "reasonably substantial." Abzena will use the cash to acquire or license new technologies and expand its service capacity. While prospects have improved for companies trying to raise cash in the U.K., the lure of the U.S. is still strong. GW Pharmaceuticals (AIM:GWP) is the latest to court investors across the Atlantic, with the British cannabis biopharma hoping to raise $150 million through a Nasdaq offering. - read Reuters' article, Abzena's release and GW's news

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Cellectis to Pfizer: We like being independent too much to be bought

Pfizer's ($PFE) aborted pursuit of AstraZeneca ($AZN) showed it has a big pot of cash outside the U.S. and a desire to spend it on acquisitions, yet this week it partnered with Cellectis (EPA:ALCLS) instead of buying the French biotech outright. There is at least one very good reason for this: Cellectis wants to stay independent.

As EP Vantage reports, the $80 million (€59 million) upfront payment Pfizer made to clinch the deal represents 40% of Cellectis' market cap before news of the partnership broke. Pfizer would only have needed to dig a little deeper into its ex-U.S. war chest to buy Cellectis, but--as in its attempt to acquire AstraZeneca--it would have encountered resistance from its target. Having toiled since 1999 to develop its genome engineering tools, Cellectis likes life as an independent company too much to be consumed by Pfizer.

"We were not interested in any type of M&A transaction. The board and management made it very clear [to Pfizer] that we want to remain independent," Cellectis EVP Dr. Mathieu Simon told EP Vantage. The decision to fly solo could prove lucrative, with the extensive partnership with Pfizer worth around $2.8 billion if every program succeeds. For now Cellectis has an $80 million upfront payment and a commitment from Pfizer to buy a 10% stake in its business. The company-defining deal sent Cellectis' stock soaring 76%.

While Cellectis has no desire to become part of Pfizer, the nature of the deal necessitates a close collaboration, something the French biotech intends to facilitate by setting up shop in the U.S. A spokesperson for Cellectis told FierceBiotech the plan is to open a site in New York City by the end of the year. Details like headcount are still being worked out, but the basic plan is in place. Cellectis is opening the site to work more closely with U.S. hospitals and Pfizer, which has an oncology R&D site in Pearl River, NY, a town around 25 miles north of Manhattan. - read the EP Vantage article and FierceBiotech's take

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EU biopharma given starring role alongside AZ, GSK and J&J in British dementia push

The United Kingdom's Medical Research Council (MRC) secured some household names to support its £16 million ($27 million), two-million-person dementia study, with AstraZeneca ($AZN), GlaxoSmithKline ($GSK) and Johnson & Johnson ($JNJ) all signing up. But smaller businesses have taken up some of the support roles, with Britain's Ixico (AIM:IXI) and Spain's Araclon Biotech committing to the project.

The MRC has rounded up the collaborators to help it with a study that it claims is the world's largest for research into dementias. Instead of studying dementia patients--as typical biopharma trials do--the MRC will look at healthy people in an attempt to spot patterns in those who go on to develop the condition. The payoff for such work is likely years away, but with trial after trial of Alzheimer's drugs failing, the grounding in how and why dementia progresses could prove useful.

Cardiff University's Dr. John Gallacher

AstraZeneca, GSK and J&J have joined with several smaller players to support MRC. London-based imaging specialist Ixico is contributing its services. And Grifols' subsidiary Araclon--which has an Alzheimer's diagnostic and immunotherapy in the pipeline--is also on board. The mix of companies and universities supporting the push is intended to help MRC find biomarkers, specifically ones that aid the selection of patients for clinical trials and show who is at risk of developing dementia. The MRC is also interested in finding whether drugs originally developed for other diseases can help slow progression.

Many leading biopharma companies have spent a lot of cash investigating similar questions, but these were closed, secretive projects. "In the past, companies and academics have too often worked in silos. This project will bring them together to tackle a very difficult problem," study lead Dr. John Gallacher told the Financial Times. Universities in Oxford, Cambridge and London--the tips of England's "golden triangle"--are part of the study, as is U.S.-based biomarker specialist SomaLogic. - read the release and FT's take

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Of Note:

Biogen Idec ($BIIB) gave Sobi (STO:SOBI) 120 days to decide whether it wants to add a hemophilia A program to their collaboration. Sobi will base its decision on the strength of preclinical data and make a payment to Biogen if it takes up the offer. Release

Shares in GW Pharmaceuticals (AIM:GWP) rose after the British biopharma posted positive data on its cannabinoid treatment for a rare form of epilepsy. Seizure frequency fell 44% among patients taking the drug in a small, non-placebo-controlled trial. FierceBiotech

Nordic Nanovector closed a pre-IPO placement worth NOK 250 million ($41 million), giving it the cash to advance its non-Hodgkin's lymphoma candidate through clinical development. The Norwegian biotech originally planned to raise NOK 150 million but increased the offering in response to strong demand. Release

The United Kingdom's Technology Strategy Board awarded Ziarco Pharma £1.7 million ($2.9 million) to help the Pfizer ($PFE)-backed biotech finance a Phase IIa trial of its atopic dermatitis drug. Release

Trade group France Biotech elected a new board of directors. Erytech Pharma's Pierre-Olivier Goineau will chair the 17-person board, which includes a special adviser to Sanofi ($SNY) CEO Chris Viehbacher. Release

Sweden's Cantargia named a new CEO and raised SEK 20 million ($3 million) to advance its lead monoclonal antibody. Release

Servier moved a BCL-2 inhibitor identified in its collaboration with Vernalis into Phase I. The advancement of the oncology compound triggered a £1 million ($1.7 million) milestone payment to Vernalis. Release

Israeli vaccine developer Vaxil Biotherapeutics saw its stock jump after it received investment from a Russian company. Vaxil is developing vaccines targeting multiple myeloma and tuberculosis. Globes

Novo Nordisk ($NVO) strengthened its hand in the diabetes market with data its CSO called "unprecedented." The drug combines Victoza with Novo's new insulin, Tresiba. Novo has already applied to market the drug in Europe and expects the regulatory panel to make a decision in the next couple of months. Bloomberg | FierceBiotech

BrainStorm Cell Therapeutics stuck a deal to raise $10.5 million (€7.7 million), part of which will be used to finance the Israeli biotech's Phase II amyotrophic lateral sclerosis clinical trial. Release

Actelion's (VTX:ATLN) stock price jumped more than 20% after the Swiss biotech posted positive Phase III data for its oral pulmonary arterial hypertension drug. Jefferies analyst Peter Welford called the trial a "roaring success" and raised his peak annual sales forecast from $800 million (€590 million) to $1.4 billion. FierceBiotech

Pfizer ($PFE) bought a melanocortin receptor program from tech-transfer group MRC Technology. The deal gives Pfizer a set of small molecules that were discovered as a result of work done at Queen Mary University of London. Release

Silenseed filed its papers for an IPO on Nasdaq. The Israeli biotech hopes to raise $35 million (€26 million) to finance development of its targeted delivery system for treating cancer. Nasdaq

Galapagos' (AMS:GLPG) ulcerative colitis drug failed to deliver clinical improvement in a short, small Phase II proof-of-concept trial. The Belgian biotech is now running subgroup analyses on data from the four-week, 45-person study. Release

Oxford BioMedica (LSE:OXB) fell short of its fundraising goal after less than 30% of shares made available in an open offer were sold. Having secured £20 million ($33.9 million) in firm commitments, the British biotech hoped to raise a further £5.7 million through the open offer. Release

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Read previous editions of the EuroBiotech Report here.

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