12:00 AM
May 26, 2008
 |  BioCentury  |  Finance

Ebb & Flow

Based on its track record of exits from its BioDiscovery 1 and 2 funds during the last eight years, Edmond de Rothschild Investment Partners has raised a new E150 million ($233.8 million) fund in less than four months. Its five IPOs and six trade sales from the first two funds - including last week's acquisition of U3 Pharma by Daiichi Sankyo (Tokyo:4568; Osaka:4568) - underpinned support for BioDiscovery 3, which was to be unveiled this week.

"We began the fundraising on Feb. 4, and we have benefited from the strong support of investors from our original funds. Many of them have returned, increasing significantly the amounts they have allocated to our funds, with one of them investing five times more than what they had put in BioDiscovery 2," EdRIP partner Olivier Litzka told Ebb & Flow.

BioDiscovery 2, which closed in December 2005 at E80 million ($124.7 million), took about 18 months to raise.

According to partner Gilles Nobecourt, at the end of 1Q, the valuation of the BioDiscovery 2 companies suggested an IRR of about 23%. "We are making about 4.1x return from our BioDiscovery 2 investment in U3 Pharma, which, because it was made less than two years ago, gives an IRR of about 120%," he added.

Through BioDiscovery 3, EdRIP expects to lead or co-lead investments in 15-20 life science companies across all stages of development. The majority of investments will be in drug development companies, plus medical technology and molecular diagnostic plays. The average investment will be about E8 million ($12.5 million) with a maximum of E15 million ($23.4 million) per company.

The majority of existing investors participated, including Amgen (NASDAQ: AMGN), La Caisse des Dépôts et Consignations and La Compagnie Financière Edmond de Rothschild. New investors include health insurance companies, public pension funds and social institutions and institutional investors.

The closing brings EdRIP's total funds under active management for life sciences to E300 million ($467.8 million). EdRIP also has opened a greenshoe of up to E15 million ($23.4 million) for international investors.

Taking the money

With commercialization probably six years away, U3 Pharma's investors decided to sell the cancer company to Daiichi Sankyo (Tokyo:4568; Osaka:4568) for E150 million ($234 million) in cash. This is the third acquisition of a cancer biotech by a Japanese pharma this year: Takeda (Tokyo:4502) acquired Millennium for $8.2 billion, while Eisai (Tokyo:4523; Osaka:4523) bought MGI Pharma for $3.9 billion (see BioCentury, April 14).

"U3 would have required additional financing to continue the development efforts of their lead programs. We had been looking at strategic business development and opportunities to partner U3's programs. This acquisition was a direct result of those discussions," Jean Deleage, founding partner and managing director of Alta Partners, U3's first and largest institutional investor, told Ebb & Flow.

U3's programs are focused on human antibodies for breast, lung and colorectal cancers. The company's lead product is U3-1287 (AMG 888), a human mAb against HER3. U3 and partner Amgen (NASDAQ: AMGN) intend to start clinical development this year.

To date, U3 had raised about E42 million ($65.5 million) through investors that include Alta, Atlas Venture, Biomedical Sciences Investment Fund of the Singapore EDB, LCF Rothschild Venture Partners and Life Sciences Partners.

Judge backs Icahn

Carl Icahn got at least part of what he wanted from Biogen Idec (NASDAQ:BIIB) last Monday, when the Delaware Chancery Court ruled the financier's funds have a right to see internal documents from the company relating to the sale process that went awry last year.

Icahn's funds sued to gain access to the documents in April (see BioCentury, April 14).

The judge ordered lawyers for both sides to agree on which meeting minutes and documents would be disclosed. If they cannot do so, he directed them to consult him to resolve any dispute.

Judge William B. Chandler III also stipulated the documents would remain confidential and, at least initially, available only to the counsel for Icahn's funds, which held 4.3% of Biogen Idec at May 16.

The judge expedited his ruling to come in advance of a June 19 shareholder meeting at which potential changes to the board and company bylaws will come up for vote.

Icahn has nominated his own slate of three directors and is lobbying to change the company bylaws to limit...

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