Two biotech companies failed to price their initial public offerings last week as Detroit automaker General Motors stole the headlines with what could be a record-setting $20 billion IPO.
This article published with permission from The Burrill Report.
Both Anacor Pharmaceuticals Inc. and Zogenix Inc. failed to price their initial public offerings last week as Detroit automaker General Motors Co. (NYSE: GM) stole the headlines with its $20 billion IPO -- an offering that could become the world’s largest initial offering if underwriters exercise their option for all of the overallotments.
Anacor has developed five molecules that are in clinical development using its boron chemistry platform, a technology that it says allows improved absorption of drugs with fewer side effects. The Palo Alto, Calif., company has a research agreement with Eli Lilly & Co. (NYSE: LLY) for animal health products and a partnership with GlaxoSmithKline PLC (NYSE: GSK) for anti-infectives. This is the company’s second attempt to go public, after withdrawing its initial offering during the financial crisis of 2008. The biopharma plans to offer 4.7 million shares priced between $16 and $18 to raise up to $80 million to help fund a late stage trial of its lead therapeutic, a topical antifungal to treat nail and nail bed infections.
Zogenix, which sells a needle-free migraine drug that is delivered under the skin, had hoped to go public this week through an initial offering of 6 million shares priced between $12 and $14 per share. The company began marketing its device in January and had achieved net product revenues of $11.8 million as of the end of September.
Anacor and Zogenix were considered among the weakest prospects during a week when 10 IPOs were planned, and their offerings — expected to listed on the Nasdaq Stock Market under the symbols ANAC and ZGNX, respectively -- have been moved to day-to-day status, which means that underwriters will price them when they can, depending on market demand.
In Europe, the anticipated IPO of Zealand Pharma was delayed to Nov. 23. The Danish biotech had hoped to raise about $140 million but cut its offering price on Thursday by 33% to 44%, even as its Chief Executive David Solomon told Reuters that there was broad investor interest. The company’s lead product, a type 2 diabetes drug, is partnered with France’s Sanofi-Aventis S.A. with late stage data due in the coming months.
In Russia, however, Pharmsynthez, a small pharmaceutical company, raised $17.7 million through an initial public offering on the Moscow stock exchange, selling 22 million shares at the middle of its price range, raising 528 million rubles (US$17.65 million), according to Reuters. The contract manufacturer aims to list on the Nasdaq in 2012 or 2013.
Elsewhere, Eli Lilly’s corporate venture group Lilly Venture participated in two venture financings that closed during the week. It led a $24 million series C round in Cerulean Pharma Inc., a Cambridge, Mass., developer of nano-drugs. All other existing investors including Polaris Venture Partners, Venrock, Lux Capital, and Bessemer Venture Partners participated in the round. The company plans to use the funds to advance its first-in-class nano-pharmaceutical into a mid-stage trial in non-small cell lung cancer. It will also use the funds to further develop its platform technology, which it says makes drugs more effective and with fewer side effects.
Lilly Ventures also participated in a $36.5 million tranched series C financing in San Francisco-based Sutro Biopharma Inc. Skyline Ventures led the round with participation from Amgen Ventures and existing investors SV life Sciences and Alta Partners. Sutro develops and designs novel protein therapeutics and biosuperiors that have site-directed modifications, including modifications incorporating non-natural amino acids, opening up opportunities to create protein therapeutics that cannot be produced using conventional methods.
Boston-based Verastem Inc. closed a $16 million series A financing from Longwood Founders Fund, Bessemer Venture Partners, Cardinal Partners, and MPM Capital. The company is focused on discovering and developing novel drugs that selectively target cancer stem cells.
In other market-moving news:
Biotech stocks bounced back last week, heading into the holiday shortened week in positive territory.
The sector’s top five companies by market cap did not move the needle much, apart from Genzyme Corp. (NASDAQ: GENZ), which closed the week up 3.6%. The Cambridge, Mass., company announced that it is selling its diagnostic products business to Sekisui Chemical for $265 million in a deal the companies expect to close by the end of the year. Genzyme's business provides raw materials, clinical chemistry reagents, cholesterol tests and infectious disease products to manufacturers, laboratories and health care providers. It had $167 million in revenue last year.
Meanwhile, the Wall Street Journal reported the company is negotiating a new deal with Sanofi, after rejecting the French company’s earlier $18.5 billion hostile takeover bid as inadequate. The report came amid rumors that Japan’s Takeda Pharmaceutical Co. Ltd. is considering a competing offer. Genzyme’s shares were at $71.44 in afternoon trading Monday.
Amgen Inc. (NASDAQ: AMGN) also featured prominently in the news during the week. The U.S. Food and Drug Administration approved its osteoporosis drug denosumab for reducing fractures in prostate and breast cancer patients, an indication that may boost sales to $2.4 billion in five years, analysts predict. In addition, there was speculation in the press that Amgen may be preparing to put in a bid to acquire Swiss pharmaceutical company Actelion. Amgen’s shares were at $54.35.
Mela Sciences Inc. (NASDAQ: MELA) shares more than doubled after an FDA panel voted to recommend approval of Irvington, N.Y., company's skin-cancer detection device, MelaFind. Mela’s shares were at $4.49.
And Merck & Co. Inc. (NYSE: MRK) shares received a boost on news its experimental drug anacetrapib raised levels of good cholesterol while cutting bad cholesterol, and may have helped patients avert heart complications in a late-stage clinical trial, according to a report by Bloomberg. The Whitehouse Station, N.J., drug giant’s shares were at $35.60.
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