12:00 AM
 | 
May 05, 2008
 |  BioCentury  |  Finance

Ebb & Flow

Publicly quoted European biotechs, beaten down by tough capital market conditions, will take some comfort from last week's news that the Netherlands' largest pension group is committed to increasing its focus on small-cap life science plays. With E217 billion ($338.4 billion) in assets under management, APG Investments, a Dutch pension services business, has turned to Life Sciences Partners Group to assist it in identifying investment opportunities.

"LSP will act as a gatekeeper for APG as if it was an LP in one or our funds. We will be responsible for providing ready-to-go investment opportunities in a pro-active manner that APG will subsequently invest in," Mark Wegter, LSP general partner, told Ebb & Flow.

According to Martin Eijgenhuisjen, APG's senior healthcare portfolio manager, the pension company sees opportunities within publicly listed European small and mid-cap biotechs, but recognized that it needed specialized expertise to make investments.

Neither party is revealing how much money might be made available, nor any details of the relationship's financial arrangements, beyond saying that they are in line with industry standards. "They should provide us with an incentive to build a balanced biotech portfolio of listed stocks that should provide venture-like returns," said Wegter.

"Given the profile of many of the European small and mid-cap biotechs, we will apply a private equity investment approach to public equity investing. This means that a significant portion of our investments will be in new offerings, backing undervalued companies to achieve their long term development goals," he told Ebb & Flow.

LSP has already completed one undisclosed transaction and Wegter says other deals are in the pipeline.

A dedicated LSP team, led by Wegter and LSP partner Joep Muijrers, will focus on companies active in therapeutic development, medical devices, and molecular diagnostics, at any stage of development. The team will not restrict itself in terms of minimum market caps nor liquidity.

LSP is discussing similar arrangements with a number of other large long-term institutional investors. The VC has E400 million ($623.8 million) under management.

Lupus letdown

After a stellar first quarter, the second quarter has been all downside for Genentech (NYSE:DNA). On March 26, the stock hit $82.01; at last week's end it was off $14.77 from that 1Q high, an 18% slide.

The latest ding came on Tuesday, when Genentech said its EXPLORER Phase II/III trial of Rituxan rituximab anti-CD20 mAb to treat systemic lupus erythematosus (SLE) missed the primary endpoint of proportion of patients with a major or partial clinical response, as measured by the British Isles Lupus Assessment Group (BILAG) index at week 52.

The study also missed all the secondary endpoints, including the proportion of patients with major responses, the proportion with minor responses, and time to moderate or severe flare over 52 weeks (see B12).

Spokesperson Tara Cooper noted the data were unblinded just the prior Friday, saying it was "premature at this point" to determine any implications the EXPLORER results might have for the company's other ongoing lupus trials.

Genentech and Rituxan partner Biogen Idec (NASDAQ:BIIB) have a lot riding on lupus. Rituxan is in the LUNAR Phase III trial for lupus nephritis. Also, Genentech's ocrelizumab (R1594), a second-generation mAb against CD20 partnered with Biogen Idec and Roche (SWX:ROG), is in the Phase III BELONG trial in lupus nephritis.

Lupus nephritis is inflammation of the kidney caused by SLE, and these studies have different primary endpoints than EXPLORER. LUNAR is targeting improvement in renal function, urinary sediment and proteinuria in patients with ISN/RPS 2003 Class III or IV active lupus nephritis. BELONG aims for complete or partial response in renal function, urinary sediment and proteinuria in the same category of patients.

Data for LUNAR and BELONG are expected in 1Q09 and 2H10, respectively.

Ocrelizumab is also in the Phase III BEGIN trial in SLE. That study has the same...

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