EuropeanBiotechnology

Science & Industry NewsOctober 2012

SPECIAL

II European BiocapitalII European Biocapital

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Euro|Biotech|NewsNº 10 | Volume 11 | 2012 39

Special

It’s a tough period for European biotechs looking for much-needed financing. Al-though a number of fresh biotech VC funds were set up this year with strong support from public sources, the money doesn’t seem to have trickled down to many com-panies yet. This fact is illustrated by Mu-nich-based Proteros Biostructures GmbH – the lucky number ten in the largest VC

Intro

Biocapital in Europe – a mixed bag Europe’s biotechnology companies are on the move, and nowhere is that better illus-trated than by their growing need for money – up to US$5.7bn this year, according to Biocentury. A look at financing numbers from the first half of 2012 makes it clear that venture and public capital will not be able to satisfy that demand.

fore market launches make medtech one of the more interesting areas,” he said in an interview with EuroBiotEchNEws (see p. 40). But there are some signs of hope. In Sep-tember, Germany’s CureVac AG received about a80m from its patron Dietmar Hopp – one of the largest European VC rounds for years. Together with Thomas Strüngmann, who set up and sold Hexal AG for a6.5bn to Novartis, Hopp is the most active investor in the German-speaking Europe. Several fam-ily offices follow his lead.

While the stock market generally hasn’t provided good news for biotech in most European countries, Belgium and France continue to perform well (see p. 21). This year has seen two initial public offerings in France, from DBV Technologies and Adocia (see p. 40). However, individual amounts of money collected were small. In terms of secondary financings, Vernalis (UK) and Thrombogenics (Belgium) lead the pack with amounts above and beyond a100m. As the market remains as unpredictable as ever, it will be interesting to see what the second half of 2012 brings.� D

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Public Company Volume (Euro) Comment

A�Vernalis plc (UK) 80.0m Investors support change to new business model as a specialty pharma.

A�Thrombogenics NV (B) 77.8m Company sought and found new money to fund US launch of ocriplasmin.

A�Swedish Orphan Biovitrum AB (S) 68.0m Swedish company restructures its debt.

A�DBV Technologies SA (F) 41.0m IPO at Euronext.

A�Algeta ASA (N) 35.4m Algeta sells fresh shares, investor Abingworth old ones.

A�Tissue Regenix (UK) 30.0m Regmed specialist funds development activities.

A�Adocia SAS (F) 27.4m IPO at Euronext.

A�Cytos AG (CH) 26.4m Cytos AG receives rescue package from existing and new investors.

A�Clavis Pharma ASA (N) 23.9m Pivate placement to fund development operations

A�Wilex AG (D) 21.2m Dietmar Hopp supports cancer antibody specialist with bridge financing.

funding in the first half of 2012. But even it only landed a5m (see below).

There’s stiff global competition to receive the blessings of remaining active VC funds. For Rainer Strohmenger, Funds Manager for Wellington Partners, investing in bio-tech is still currently only a secondary op-tion: "Shorter development times and low-er amounts of money will be invested be-

Private Company Volume (Euro) Comment

A�Agendia NV (NL) 50.0m Private placement to increase marketing activities.

A�Magnisense SA (F) 44.3m Rusnano and existing shareholders invest in production facilities in Russia.

A�ADC Therapeutics (CH) 38.8m Celtic Therapeutics launches new ADC company in Lausanne.

A�Probiodrug AG (D) 15.0m Edmond de Rothschild and others invest to bring Alzheimer drug to clinical proof.

A�Galecto Biotech AB (DK) 10.0m Sunstone and SEED Capital expand Series A round.

A�Pharnext SAS (F) 8.0m Second financing round for French CNS specialist.

A�Apogenix GmbH (D) 7.5m Dietmar Hopp invests in further clinical development of Apogenix‘ drug candidates.

A�Vivia Biotech SL (ES) 7.3m Spanish cancer specialist receives funding from Andalusian and European sources.

A�Telormedix SA (CH) 6.0m Swiss specialist for cancer and inflammatory diseases receives venture capital.

A�Proteros Biostructures GmbH (D) 5.0m Proteros convinces BayBG to support company re-alignment and service expansion.

top 10 public and private financing deals for European biotech companies in the first half of 2012

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40 Euro|Biotech|News Nº 10 | Volume 11 | 2012

special

AdociA

Successful IPO in challenging times iPos have stalled completely in Europe... except in France. Two companies – dBV Technol-ogies and Adocia – have gone public on the NYSE Euronext Paris so far in 2012, although the amount of money they managed to collect was significantly lower than it would have been in pre-crisis days. Gérard Soula, President and cEo of Adocia, told EuroBiotEchNEws howhis firm is doing on Europe’s biotech capital market in troubling times.

tential US$156m in milestone payments. Also significant was the fact that the part-nership demonstrated the uniqueness of Adocia’s BioChaperone® platform, and validated its business model. The good news is that partnership for innovative products is welcome by a Big Pharma hungry for innovation.

ipO: 27.5 million euros raised

The results of two recently-announced Phase II clinical studies on fast-acting hu-man insulin and on the treatment of diabetic foot ulcer have also been a major step up for Adocia in illustrating and validating the po-tential of our Bio Chaperone technology. The latest key event was the registration of six new patents protecting Adocia’s technology for diabetic foot ulcer treatment, thus rein-forcing our competitive position.

The major development this year has been our successful Initial Public Offer-ing, the first in 2012 on the NYSE Euron-ext Paris, in what remains a challenging market environment. This adventure was made even more stressful for manage-ment since the stock market had been more or less closed for about a year to biotech companies. That made it difficult to get clear feedback on investor interest in our company.

The company raised a27.5m. During the road show, our management saw great interest from investors. That’s because BioChaperone technology ap-plied to both our projects and potential applications such as insulin therapies, which represent a market of more than US$17bn worldwide.

The other key factor in our success was our business model, which has the advantage of dealing with Big Pharma early in the product development proc-ess, generating revenues long before product approval and consequently con-suming less capital. Since its inception in 2006, Adocia has raised a55.3m (in-cluding the IPO).

The company still had a34m in cash at the end of the second quarter of 2012. Management doesn’t expect that we will need to raise more cash to execute our business plan for at least three years.

Adocia is a biotechnology company spe-cialised in the development of best-in-class medicines with already-approved therapeutic proteins. Today, the compa-ny is focusing its activity on insulin ther-apy and the treatment of diabetic foot ul-cer, one of the main complications of di-abetes. Diabetes has reached pandem-ic proportions, currently affecting more than 366 million people, touching not only developed countries but also increasingly emerging countries. Adocia’s strategy is to develop efficient treatments but in an affordable way for everyone. The French biotech sector has analysed the global pharmaceutical industry, which is cur-rently going through major changes as it searches for new models. The two deter-minant pharmaco-economic factors are speed and the cost of technological inno-vation. Our business model is to develop our innovative products up to “proof-of-concept” and then to license them to big biopharma.

Getting through a crucial year

2011 was a pivotal year in the deployment of Adocia’s corporate plan – one that saw us achieve key milestones. Among them was the closing of a first partner-ship agreement on an ultra-fast insulin analog formulation. This agreement was signed with a leading player in the global pharmaceutical industry, and it led to a payment of US$10m in up-front and a po-

Gérard Soula, President & cEo of Adocia,has a strong track record in innovation in the field of biotechnology. He was the cEo for 15 years at Flamel Technologies, a biotech company based in Lyon that he founded. Under his leadership, Flamel carried out an iPo and a second offering on the NASdAQ. By the time Soula left, the company had 250 employees, US$100m in cash in the bank and a market capitalisation of US$500m. Before that, he was the director of scientific research at French chemicals and pharmaceuticals company Rhône Poulenc, and was awarded the Rhône Poulenc innovation Prize for his invention of a new type of catalyst based on molecular self-assembly. More recently, he has received the chaptal Prize for his contributions to the development of pharmaceutical innovations. Gérard Soula is the co-author of 138 patents.

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Nº 10 | Volume 11 | 2012

special

Since the IPO, the company has an-nounced two major positive clinical re-sults related to its ultra-fast human in-sulin project, as well as the clinical tri-als related to the treatment of diabet-ic foot ulcers. Adocia also announced the issuance by the American US Pat-ent and Trademark Office and the Euro-pean Patent Office of a patent protect-ing our formulations for the treatment of the condition.

controlling the burn rate

More recently, Adocia published financial results for the first half of 2012, which showed an increase in operational rev-enues of more than 90%, with expenses clearly under control. In short, the an-nouncements to date are in line with ex-pectations. More than ever, it is crucial to obtain unique product performance, but the burn rate has to be tightly controlled due to market conditions.

a strong but responsible financial position

Thanks to the IPO, the company has the financial resources to develop its projects over the long term and is thus able to create value for its shareholders. In ad-dition, Adocia has gained visibility with biopharma ceutical companies by publish-ing its financial accounts and through its policy of transparency. We prepared the IPO last year together with the help of ex-

ternal financial auditors and legal coun-sel. But since its inception, Adocia has al-ways presented its results and structured itself in a way that was already compli-ant with the rules governing public com-panies – which made the process easier. The company has seen its market-cap significantly decrease since listing, de-spite three positive announcements. In response, our management has organ-ised meetings with shareholders to up-date its portfolio of activity and reiter-ate that potential value is based on part-nerships and clinical trial achievements, which take time to happen.

Delivering on promises

In many ways, therefore, the last few months have helped our company to take on a new dimension. Our business mod-el – that of a biotechnology company that requires low capital and strongly focuses on research and innovation – has proved successful. Adocia will continue to car-ry out the development of its projects by strengthening its organisation and man-agement while continuing to control gen-eral expenses and manage costs in order to be able to dedicate its resources to its all-important R&D activities. With its high-quality portfolio of patents and promising projects, as well as a strong financial struc-ture and the commitment of its team day in, day out, the company will continue to make all necessary efforts to earn its partners’ and shareholders’ long-term trust. B

adocia Management at NYse euronext after the ipO

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40-41_EBSIN_10_12_Special_Soula_pad.indd 41 04.10.2012 11:47:43 Uhr

42 Euro|Biotech|News Nº 10 | Volume 11 | 2012

special

Rainer Strohmenger joined Wellington Partners in 1997, and became a Partner in December 2000. His fifteen years of investment activity have involved financing some of the most successful European biotech, medtech, and diagnostics companies. In the late 1990s, Strohmenger co-managed Wellington’s investment in Swiss biotech player Actelion, today a listed company with a market cap of more than four billion euros. He was also responsible for the investment company’s investments in both immatics and mtm laboratories, which was purchased for more than a130m by Roche. Prior to joining Wellington, Strohmenger was involved in medical research with a primary focus on cardiovascular physiology, as well as in research on health economics at the Ludwig-Maximilian University in Munich. He holds a PhD in medicine and a MSc in economics, and was trained at MIT’s Entrepreneurship Center in Boston.

InTERvIEW

“70 million euros are a good sign”Pan-European investor Wellington Partners has closed its fourth life sciences fund. In an interview with EuroBiotEchNEws, General Partner Rainer Strohmenger talked about Wellington’s investment strategy, and why he currently prefers medtech in-vestments.

Euro|BioTech|News ?Mr. Strohmenger, how would you classify your new a70m life sciences fund?

STRoHMEnGER: !I think the closing sends a very positive signal for the life sciences! The new fund is significantly larger than its predeces-sor, which was at the end of its investment term. Raising new money means a seam-less transition from one fund to another. In these troubling times, that can’t be tak-en for granted.

Euro|BioTech|News ?How would you describe your investment strategy for it?

STRoHMEnGER: !We will invest preferably in medical tech-nology and diagnostics, and only very se-lectively in the development of therapeu-tics. It is very challenging to fund such companies with the a7m-a10m that we will reserve for each investment. Howev-er, we’re not excluding the idea of funding drug developers if we see an outstanding opportunity.

Euro|BioTech|News ?And geographically?

STRoHMEnGER: !Europe and especially the German-speak-ing region will be at the centre of our ac-tivities, with more than 50% of the invest-

ed capital. In fact, this is not far from the actual market share that Germany, Aus-tria and Switz erland represent. From our point of view, it is also easier to lead invest-ments successfully when they are close to your front door.

Euro|BioTech|News ?What is the final target size of your fund and when will it be reached?

STRoHMEnGER: !We’re optimistic that we’ll achieve our over-all final size goal of a120m within the next few months – we have a large investor pipe-line. Many people wait for the first closing, as this is the sign that the fund will indeed become a reality. Today, many fundraising attempts are open-ended, and that leaves their investors with a lot of uncertainty.

Euro|BioTech|News ?Where’s your investment sweet spot?

STRoHMEnGER: !We are looking for innovative companies that are developing diagnostic methods or medical devices that seek to address a large medical need. Their products need to be better and/or ideally cheaper than the gold standard. A best-case scenario contains an established reimbursement system as well. These companies benefit from the more favourable regulatory envi-ronment in Europe compared to the Unit-ed States.

Euro|BioTech|News ?How would you compare the biopharma and the medtech markets?

STRoHMEnGER: !The biotech exit and licensing model is in a very interesting period, because Big Phar-ma is cutting down its own research and in-creasingly relies on external innovation. The trade sale market in medical devices is al-ready pretty much established, especially in the US. It is smaller than the bio pharma space, but new players like Samsung or Sony are entering the club. I believe that the number of acquisitions in Europe will rise. A company like Medtronic has achieved world market leader status only by acquiring tech-nologies. Combined with shorter develop-ment times and lower amounts of money to be invested until market launch, medtech is one of the most interesting areas.

42_EBSIN10_12_Special_Interview_pad.indd 42 04.10.2012 11:48:13 Uhr

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