Circassia resists Nasdaq lure and puts its faith in London

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Biotech IPOs are coming thick and fast in 2014: three were completed just yesterday and three more have followed today. Without exception, those biotechs that have listed on Western exchanges have plumped for Nasdaq. But the UK allergy specialist Circassia, which announced plans to float today, has decided against forsaking its home turf with a planned £175m ($285m) IPO on the London stock exchange.

“It’s a British company with British technology,” Steven Harris, Circassia’s chief executive, told EP Vantage. “The London market’s a great market.” It will have to be – no biotech company has sought a listing on the main market in London since 2006, and EP Vantage believes that Circassia's could be the largest UK biotech IPO ever (see table below).

De-risking

Mr Harris believes that the company will succeed in its unusual ambition as its projects, led by an immunotherapy for allergy to cat hair, are in late trials. “We’re at a different stage to many companies that are coming to market. We have a programme in phase III, phase IIb data on others – we’re at a much later stage.”

He adds that the company wants to raise enough money to allow it to “commit to the development of our programmes”, saying that $285m should keep Circassia going until ToleroMune Cat Allergy Vaccine, its lead project, reaches the market. Phase III data are expected in the first half of 2016, so launch could come around a year later.

The company feels that now is the time to float because it has proven its technology, releasing “really exciting results” from phase IIb studies on products for allergies to dust mites and grass. “The results gave confidence in our platform technology, de-risking both the platform and the company,” Mr Harris said.

More details on the company’s phase II grass allergy project, among others, will be released in the IPO prospectus, Mr Harris said, and data will also be presented at the annual meeting of the American Academy of Allergy, Asthma & Immunology at the beginning of March.

Naturally an IPO could provide an exit for Circassia’s backers. Imperial Innovations owns 20% of the firm, and Invesco Perpetual and Lansdowne Partners have also invested (EP Vantage Interview – Circassia gets $100m injection for allergy trials, April 19, 2011). Mr Harris said he did not expect its current investors to sell, “but we’ll see how it goes”.

First since 2006

The poor track record of many UK-listed drug developers has made it very hard for biotechs to list in London. The last development-stage company to manage an IPO on the LSE was Renovo in 2006; it was wound up last year after its lead project failed.

Circassia is certainly seeking the biggest biotech IPO in London since 1995, information from the London Stock Exchange shows – data before this are not available. The previous record holder was Ark Therapeutics, which raised £55m in 2004 in a main market listing. Like Renovo, though, this is hardly an example to follow – it is in the process of winding itself up after its gene therapy products failed to progress.

With fairly dismal precedents, Circassia’s flotation, pencilled in for March, will have to be wildly successful if it is to drive a renaissance in the UK markets. At least the company has one of the prerequisites for a successful float: an executive with a track record of building and selling companies. Mr Harris founded Zeneus Pharma, selling it to Cephalon for $360m in 2006, and before this was CFO of PowderJect Pharmaceuticals, acquired by Chiron for $1bn in 2003.

But Mr Harris said he was not planning to do the same with Circassia: “I never focus on selling. The fun is in building the business.” Management clearly enjoys a challenge, and in deciding to stay away from the relative ease of a Nasdaq IPO it has set itself a very interesting one.

Biggest biotech listings in London (since 1995)  
Rank Company Amount raised (£m) Market Year
1 Ark Therapeutics 55 Main Market 2004
2 Renovo 50 Main Market 2006
3 Pharmagene 41 Main Market 2000
4 Prostrakan 40 Main Market 2005
5 Hutchison China Meditech 40 AIM 2006
6 XTL Biopharmaceuticals 36 International Main Market 2000
7 Oxford Asymmetry  33 Main Market 1998
8 Oxford Glycosciences 31 Main Market 1998
9 Keryx Pharmaceuticals 30 AIM 2000
10 AGI Therapeutics 29 AIM 2006

Source: London Stock Exchange

To contact the writer of this story email Elizabeth Cairns in London at elizabethc@epvantage.com or follow @LizEPVantage on Twitter

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