New money floods into biotech

In the past week or so, Movetis NV of Turnhout, Belgium has announced plans to raise €112 million in an IPO on Euronext Brussels, Oxagen Ltd of Abingdon, UK raised £16 million in a third private round, 4SC AG of Martinsried, Germany, took in €30 million in a combined rights issue and private placement, Thrombogenics NV, of Leuven, Belgium, raised over €42 million in a private placement and the Madrid-based stem cell therapy specialist Cellarix raised €27 million in a private round.

Even the moribund Alternative Investment Market in London has seen a slight stirring, with Epistem plc opportunistically raising £2.9 million.

Meanwhile in Sweden, Diamyd Medical AB, raised SEK 218 million (€21 million) in a rights issue, Biovitrum AB’s shareholder agreed to back a SEK 1.6 million rights (€154,000) issue to fund the acquisition of fellow orphan drug specialist Swedish Orphan International, and Karo Bio AB, of Huddinge, is in the process of raising up to SEK 161 million (€1.5 million).

The sector has been further boosted by some impressive licensing agreements. Earlier this week the Norwegian drug delivery specialist Clavis AG sealed a $380 million deal, while last week Abbott agreed to pay Utrecht-based PanGenetics $170 million upfront for an antibody programme, and Astex Therapeutics Ltd of Cambridge announced a deal boasting a headline value of £300 million with GlaxoSmithKline, of which Astex pocketed £20 million upfront.

In the US too, the financial environment is improving, prompting six privately held biotechs to file for an IPO. This followed on from the successful IPOs of three specialty pharmaceutical firms during the summer.

Meanwhile, investors in NiCox’s fundraising are being lured in part by a cornerstone, €20 million investment by the Fonds Stratégique d’Investissement (FSI), the French investment body owned 51 per cent by the Caisse des Dépôts et Consignations and 49 per cent by the French Government, which has the objective of supporting medium-sized companies that are considered important for the growth and competitive position of the French economy. The FSI owns around 5 percent of NiCox and plans to invest a further €5 million in the rights issue.

Clear evidence of a meaningful change in sentiment in Europe will be provided if gastrointestinal disorders specialist Movetis manages to get its IPO away. The company is placing shares privately with institutional investors, but will also call on Belgium’s ever-supportive retail investors in a public offering. The move comes on the back of the European marketing approval in October of the lead product Resolor, a treatment for constipation. The money will support commericialisation of the drug, with the first launch in Germany due to at the beginning of 2010.

Mark Payton, CEO of Oxagen, told Science|Business that while the environment was difficult at the beginning of the fundraising process, things were more favourable by the end. “We know people have got money, but they were holding onto it, to look after existing companies. Now things are loosening in the financial markets and investors can raise new funds, I expect to see things trickling out.”

Oxagen’s £16 million third round was led by a new investor, Novartis Venture Funds, with all the existing investors following on. As with Movetis and other recent European fundraisings, the money came on the back of enticing progress in the clinic. Oxagen’s lead product, a first-in-class treatment for asthma, is close to completing Phase IIb. Anja Konig, Managing Director of Novartis Venture Fund, who is joining Oxagen’s board said the product, “has the potential to become a blockbuster.”