If by the beginning of February biotech fund managers were considering suicide, ultimately their worst fears failed to materialise. With strong run-ups into Asco and Esmo, and a post-US election bump, it was volatility rather than outright carnage that typified 2016’s markets.
One factor still driving sentiment is that, with prices now well off their mid-2015 peak, biotech is starting to look affordable. Over the holiday period news on the business development front suggested continued volatility, though biotech was still able to attract cash in numerous forms.
Indeed, it is falling asset prices that often stimulate deal making and fund raising. While the most eagerly awaited biz dev news – the acquisition of Actelion by Johnson & Johnson – failed to materialise over Christmas, earlier takeouts of Medivation, Tobira and Vitae show that if pharma likes the asset deals will get done.
As the clocks counted down the final hours of the trading year the immuno-oncology player Jounce Therapeutics pushed its IPO document across the line, filing with the SEC to raise up to $75m.
The group was only founded in 2013, and had raised about $100m from private backers including Third Rock Ventures when last July it struck a deal with Celgene worth $225m up front plus $36m in equity for JTX-2011 – an Icos-targeting MAb in preclinical trials.
JTX-2011 entered the clinic shortly afterwards, and the richness of the deal showed just how scarce agents against this particular immune checkpoint target are. However, $75m is not a huge amount to seek to raise in a float, so perhaps the gloss is slowly coming off immuno-oncology as investors struggle to find the next big thing after PD-1/PD-L1.
There was significantly worse news for South Korea’s Hanmi, which on the same day lost its second partner in three months. After Boehringer Ingelheim pulled out of a deal to develop the Tagrisso competitor olmutinib in September, Sanofi ditched Hanmi’s long-acting insulin project, the Korea Times reported.
Most unusually of all, the French firm has managed to claw back €196m ($206m) of the €400m up-front fee it had handed across, suggesting that it had not been made aware of material issues when signing the original alliance (Hanmi throws lifeline to Sanofi diabetes, November 5, 2015).
A separate asset, efpeglenatide, remains in joint development, though Sanofi has cut milestones and development funding. Hanmi fell 10%, rounding out a miserable 2016, a 12-month period in which the group’s stock lost 60%; the company is also embroiled in an investigation of insider share selling around the time of the Boehringer deal termination.
Elsewhere, cash continued to roll in for the private US biotech Intarcia which, not content with already completing a huge $215m equity raise and securing a $75m credit facility in 2016, rounded off the year with the penultimate close of a $206m round designated “series EE”.
The cash is obviously intended to provide further support for Intarcia’s glucose-lowering implant ITCA 650, which was filed for approval in November. But it could also take the group in a new direction: $50m of the raise, with a possible further $90m milestone, came from the Bill & Melinda Gates Foundation.
The charity’s involvement is geared towards developing the first once or twice-yearly anti-HIV prophylactic agent, which is to use Intarcia’s Medici drug delivery technology. The Medici system is already employed by ITCA 650.
After market close on December 27 OSE Immunotherapeutics revealed that Servier had taken out an option on Effi-7, a preclinical-stage anti-CD127 MAb with potential against autoimmune disease, and the following day its stock put on 21%.
The deal is worth €10m ($11m) up front to OSE, and it will cost Servier €30m to exercise a full licence. Servier seems most likely to opt in after phase II, a point up to which development of Effi-7 has been funded by a €20m consortium headed up by Bpifrance, a public French body.
Few biotechs can count on the levels of investor support that Intarcia enjoys, but others will hope that next week’s JP Morgan meeting gives them some smaller successes to celebrate.