12:00 AM
Feb 12, 2007
 |  BioCentury  |  Finance

Ebb & Flow

The hallway chatter at any financial or business development meeting these days is that M&A is the way to go and the markets are cold. Some wags even suggest there’s something wrong with any company that has to raise money in the public equity markets, as there must be some reason it wasn’t able to be acquired or get a blockbuster deal.

The $907.8 million raised by the sector last week suggests there’s something else going on. Indeed, the mega financing week included no giant top tier deal to pad the numbers. Instead, the money went to small and mid-size biotechs with late-stage compounds. Of the 20 public financings that raised more than $10 million, only five were for companies that didn’t have a compound at least in Phase III testing.

The deals also left some money on the table for the after-market. The two follow-on companies that disclosed share prices traded up after their deals, while two of the four IPOs that started trading also posted gains (see "Almost a Billion," A16).

IPO plentitude

With five new public companies from around the globe, biotech IPOs are picking up after the lull around the New Year. Two companies debuted on international markets in France and Tel Aviv, while another three launched on NASDAQ. In total, the IPO crowd raised nearly $300 million last week.

The week included two firsts. The biggest IPO was sold by 3SBIO - the first Chinese biotech to launch on NASDAQ. 3SBIO (SSRX) priced at $16, well above its range of $12-$14. The deal, underwritten by UBS; CIBC; and Pacific Growth, raised $115 million and valued the follow-on biologics company at $343 million. That put SSRX at number 16 among IPOs since the window opened in 2003.

The deal was a clear signal that while some big biotechs are still fighting a rearguard action against FOBs, investors are putting their wallets where they think the future is.

SSRX markets EPIAO, an injectable recombinant human erythropoietin to treat anemia, and TPIAO, a recombinant human thrombopoietin to treat chemotherapy-induced thrombocytopenia. The company has a total of six marketed products, with three in clinical development.

"In China, 90% of prescription drugs are sold through hospitals," CEO Jing Lou said on the company’s roadshow. "Our products are currently sold in 800 hospitals, and we are aiming for all hospitals."

SSRX posted a $3 million profit in the first nine months of 2006 on $11.7 million in revenue, almost all of it from China. The company is also upgrading its manufacturing to EMEA standards. "With partners, we’re hoping to enter the European arena as well," said Lou.

In its first day of trading, SSRX fell to $14.85, after opening above its offer price. For the week, SSRX fell $0.03 to $15.97.

All lined up

The other first was BioLineRx (Tel Aviv:BLRX), which raised $50 million through the sale of 28.7 million shares at $1.74, making it the largest biotech IPO ever in Israel. The offering gave BLRX a valuation of $113 million.

Founded in 2003, the company has in-licensed 10 compounds, of which three are in the clinic. Now it has funding to get it well into 2010, CEO Morris Laster told Ebb & Flow.

The company raised a total of $23 million in two venture rounds from investors including Giza Venture Capital, Pitango Venture Capital and Teva (TEVA). It also received a $9 million convertible loan from Pan Atlantic Bank and Trust that converted at the IPO. In 2004, BLRX received a $21 million grant from the Israeli government for the development of preclinical compounds.

BLRX plans to advance quickly with its three Phase I and Phase I/II candidates: BL-1040, an injectable polymer for acute myocardial infarction; BL-1020, a GABA enhanced D2 antagonist for schizophrenia; and BL-3010, a vagal nerve stimulator for acute and chronic pain. BL-1020 is scheduled to start Phase II trials in 2Q07, while BL-1040 is slated for Phase...

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