12:00 AM
 | 
Jul 04, 2005
 |  BioCentury  |  Finance

Ebb & Flow

When Apax Partners merged its Apax Partners Inc. subsidiary with Saunders Karp & Megrue earlier this year, new biotech investments were not within the scope of the combined company, which is based in the U.S. But the European parent maintains that it hasn't left the space, and said its newly closed Apax Europe VI fund will include biotechs. However, only those with a short path to profits need apply for any of the a4.3 billion ($5.2 billion) it raised, which was a300 million more than it originally targeted. It will concentrate on late stage venture, growth capital and leveraged buyouts, and its areas of focus are IT, telecoms, retail/consumer, media, financial/business services and healthcare.

"On the new transaction front, we are mainly focused on identifying businesses that are on a clear path towards a sustainable profitable business model," partner Jeremy Reffin told Ebb & Flow. "The deals we are looking at generally cover the 'later venture' and growth capital stages of the VC/private equity marketplace, as well as more traditional leveraged buy-outs."

This is an extension of the strategy put in place at the closing of the a4.4 billion Apax Europe V fund in 2001.

"It was clear at that time that it was becoming increasingly challenging for the firm to maintain such a large focus on the venture scene," Reffin said. "We adopted a strategy that shifted the emphasis for new investments towards those biotech businesses with more developed portfolios, specialty pharma businesses, and leveraged buyouts, especially in medical products."

Indeed, specialty pharma and medical products have absorbed the bulk of the more than a300 million Apax has invested in the space since early 2003.

"We also started to encourage our earlier stage companies to think about integrating forwards," Reffin added. Thus Apax has continued to support at least some of its pure play biotech investments. "We supported both Wilex and Biolipox when they raised substantial sums earlier in the year to augment their late-stage product developments," he noted.

Cancer company Wilex closed a a30 million ($36.3 million) series C round in May, while respiratory and inflammation company Biolipox raised SEK271 million ($34.9 million) in a series C round in January.

Apax also supported the forward integration efforts of RiboTargets - which went on a merging spree in 2003 - and Microscience, which last week was acquired by Emergent BioSolutions (see B4).

Others have moved into the public arena. Vaccine play Intercell (VSE:ICLL) floated on the Vienna Stock Exchange in the first quarter, while RNAi platform company Atugen merged with SR Pharma (LSE:SPA).

Big deal hunters

When Shire (LSE:SHP; SHPGY) announced plans to acquire Transkaryotic (TKTX) in April, there was a major inflection point on the near horizon: Phase III data for TKTX's iduronate-2-sulfatase (I2S) to treat Hunter syndrome. Those data came out positive late in June,...

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