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12:00 AM
Apr 01, 2002
 |  BioCentury  |  Finance

Ebb & Flow

If valuations are down, the inflow of funds to biotech is decidedly not contracting. The industry raised $5.7 billion in the first quarter, a fact that probably will bring scant comfort to the queue of companies sitting parched at the dry IPO trough. But if this pace can be sustained, the industry would raise nearly $23 billion, second only to the $37.2 billion raised in 2000.

With venture capitalists still sitting on a pile of dry powder, private equity deals made up 17% of the first quarter's action. The $960 million raised by 71 private companies was up $169 million (21%) from the first quarter last year, and brings the trailing 12-month venture total to $4.3 billion.

The biotech group thus doesn't look to be mimicking the telecom/ blowup, when some IT-dominated funds had to give money back to their limiteds when investment opportunities dried up.

Last year, more than $15 billion was raised through 46 venture funds, of which about $10 billion was aimed at the life sciences and healthcare(see BioCentury, Jan. 14). If the industry continues at the trailing 12-month run rate, the $10 billion would be put to work in a little more than two years.

Good . . . it's Friday

Aderis used the market holiday on Friday to quietly amend its IPO. The company - which is developing small molecules for CNS, cardiovascular and renal disorders - now hopes to sell 5.5 million shares at $12-$14, after filing to raise up to $100 million on Jan. 11. A $13 price would raise $71.5 million and value the company at $267.8 million. The deal is being underwritten by UBS Warburg; CIBC World Markets; RBC Capital Markets; and Gerard Klauer Mattison, which was added in the amended filing.

Market hopefuls?

With a product deal in hand from Roche (SWX:ROCZ) on top of $26 million raised in a February venture round, Gryphon is in the catbird seat for assessing the IPO market. "Depending upon the market conditions, we could IPO Gryphon within 12 to 18 months," said Friedhelm Blobel, president and CEO. Blobel noted that companies that tend to perform poorly post-IPO are those that are forced into it for financing reasons. With the financing and the ROCZ deal, worth up to $155 million, Blobel said Gryphon has more than two years of cash.

The company aims to develop protein-based drugs with increased potency by attaching polyethylene glycol-like molecules to chemically synthesized protein backbones. Blobel would like to get two compounds into the clinic before testing the IPO waters. ROCZ will develop Gryphon's Synthetic Erythropoiesis Protein (SEP) to treat anemia associated with chemotherapy and chronic renal failure patients on hemodialysis (see Technology Briefing, A13). SEP will enter the clinic this year, while Gryphon's Rantes unpartnered fusion inhibitor for HIV is slated to enter the clinic in the next 15 months.

The February financing was led by The Sprout Group, which invested $14 million. Also joining in were Forward Ventures; BioAsia; S.R. One; and existing investors.

Private rounds

Immune disorder company BioXell, which was spun off from Roche (SWX:ROCZ) in January, raised E22 million ($19.3 million) in a venture round led by MPM Capital. Other investors included ROCZ; Index Ventures; and Life Sciences Partners. BioXell will take over...

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