May
2006 issue
Strategy For The Sweet Sounds of Success?
One firm invested a total of $125 million last
month, in two collaborative entities formed with biopharmaceutical companies
that needed a strategic and financial partner, but are not yet ready to work
with a pharmaceutical company.
...
Public Equity Market
The most successful health care IPO we have seen so far this year was
priced, as were a few others, plus there were several secondary offerings,
and on deck we have an e-Health company.
...
Mergers and Acquisitions
Three billion-dollar deals were announced in April, including one deal for a
dental specialties company, among several medical device deals that
accounted for a hefty share of monthly totals.
...
Venture Capital Market
An average number of venture capital investments produced an above average
amount of total capital committed during April 2006, and once again the
largest deal was announced by a company that seeks to grow by acquisition.
...
Notes & Briefs
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News Read the past
headlines.
Companies Mentioned in this issue:
May 2006
123 Multinova p7
7TM Pharma p8
A
A.M. Pappas p8
Aastrom Biosciences p11
Abbott Laboratories p12
Abingworth Management p9
Achillion p3
Adage Capital Management p9
Advanced Cell Tech. p3
Advanced Life Sci. p3
ADVENTRX Pharm. p5
Affiris p8
Affitech p8
AGF Private Equity p7
Akorn p3
Aksys p11
Allion Healthcare p5
Alloy Ventures p8
Alphatec Holdings p3
Alteon p5, p11
Alveolus p8
Amarin p11
Amedisys p5
American Medical Sys. p5
Amevive p5
AngioScore p7
Antares Pharma p3
Aperture Venture p8
Arendals Fossekompani p8
Astellas Pharma p5
Auriga Partners p7
Azimuth Opportunity Ltd. p10
B
Banc of America p3
Banc of America Securities p4
Bay City Capital p10
Bayhill Therapeutics p8
Bear, Stearns p3
Bessemer Venture Partners p7
Bio*One Capital p4
BioAdvance Ventures p8
BioControl Medical p5
BioMimetic Therap. p3
Bioxel Pharma p11
Boston Life Science Venture p8
Brad Greenspan p8
Bridge Finance Group p12
Bristol-Myers Squibb p4
Brookside Capital p9
Bruker BioSciences p5
Bruker Optics p5
C
Caduceus Private Investments p9
California Technology Ventures p7
Canyon Creek Devel. p5
Cardinal Health Partners p4
Cardiocore Lab p8
CardioFocus p8
Care Capital p4
Cargill Ventures p7
Carlyle Senior Living p5
Caxton Health Holdings p8
CDC Entreprises Innovation p7
Cell Therapeutics p11
Centene p5
Cerimon Pharmaceuticals p8
Chroma Therapeutics p9
CIBC p3
CIBC World Markets p6
Citigroup p3
Clinical Data p3
Clintrak Pharmaceutical p5
Clubb Capital p11
Colorado Fund p9
CombinatoRx p3
Concuity p8
Corus Pharma p8, p9
CORVINUS Venture Capital Funds Management p8
Cougar Biotechnology p9
Covance p5
Cowen & Co. p3, p9
Credit Agricole Private Equity p7
Credit Suisse p6
CV Therapeutics p10
Cyclacel p10
Cyclacel Pharmaceuticals p10
CytoCore p11
D
Danaher p5
Danaher Corp. p6
De Novo Ventures p7
Deerfield Management p10
Delphi Ventures p7
Derma Sciences, p11
Deutsche Bank p3
Deutsche Bank Securities p4
Diagnostic Products Corporation p6
Domain Associates p8
DOR BioPharma p11
Dow Corning p12
Draths Corporation p8
DSM Venturing p8
Durus Life Sciences Master Fund p11
Dynavax Technologies p1
DZ Bank AG p11
E
Easton Capital Investment p8
eDiets.com p12
Edmond de Rothschild Invest- ment p7
eHealth, Inc. p4
Endoart p8
EP MedSystems p3
Epix Pharmaceuticals p5
Essex Woodlands Health Ventures p9
Ethicon p6
Evotec p11
Eximias Pharmaceutical p5
F
Federated Kauffman Fund p10
Ferrer Freeman & Company p8
First Albany p3
Fisher Scientific p5
G
GenoMed p12
GenVec p3
Genzyme Ventures p7
Gilde Healthcare p7
Gilead Sciences p8
GNI p8
Goldman Sachs p3
Goldman, Sachs p8
Grotech Capital Group p8
GTC Biotherapeutics p9
Guidant Corporation p8
Gulf Coast Medical p5
H
H&H Drug p5
H.I.G. Ventures p8
Hamilton BioVentures p7
HaptoGuard p5
HBM Bioventures p8
Health Benefits Direct p5
Health Care REIT p3
Health Care Sys. of AR p5
Health Care Without Harm p12
Health Mngmt. Assoc. p5
Healthia p8
Hologic p5
Hospira p12
Hunter-Fleming p8
I
Ingenium Pharmaceuticals p8
Innate Pharma p8
Innomed Ventures p7
Innovative Spinal Technologies p9
Insulet p9
Insurance Specialist Group p5
Integra LifeSciences p5
IntegraCare p5
InterFit Health’s RediClinic p9
Inverness Medical p5
Isis Pharmaceuticals p1
J
J&E Davy p11
J.P. Morgan Securities p4
Jefferies & Company p3
Jennison Associates p9
JMP Securities p3
Johns Hopkins Hospital p3
Johnson & Johnson p6
K
Kaplan Devel. p5
KBL Healthcare Ventures p8
Kerr Drug p9
Kleiner Perkins Caufield & Byers p8
Kleiner Perkins Caufield and Byers p4
L
LD Pensions p8
Leade Health p12
LeMaitre Vascular p3
Life Science Partners p8
LipoteRx p7
M
MDB Capital Group p11
MDS Capital p8
Medarex p3
Medavant p3
MediCor p10
MedManage Systems p8
Medwave p12
Merlin Biomed Group p9
Merrill Lynch p3
Merrimack Pharmaceuticals p9
Merriman Curhan Ford & Co. p11
MethylGene p11
MIG Funds p8
Millipore p6
Miltex p5
Mobius Venture Capital p8
Modal Capital p9
Molecular Devices p5
Montagu Newhall Associates p8
Morgan Stanley p1
MPM BioVentures p6
MX Associates p7
N
N-Gene Research Laboratories p8
Nanogen p5
National Cancer Institute p12
Needham & Company p11
NeoRx p10
NewSpring Capital p8
Noonday Asset Management p7
Northstar Neurosci. p3
Novacea p3
Novagali Pharma p7
Novartis Institutes of Biomedical Research p9
Novartis Pharma p4
Novelos p3
Novo Nordisk p8
O
Olympus Medical Systems p8
OMRIX Biopharmaceuticals p6
OptiCare Managed Vision p5
OptiMedica p8
OrbiMed Advisors p9
Orbus Pharma p11
Ortec International p11
Orthologic p3
Oscient Pharmaceuticals p11
P
Pacific Growth Equities p4
Palatin Technologies p11
Paramount BioCapital p9
Partech U.S. Partners p4
Peakadilly p8
Pelican Life Sciences p8
Peregrine Pharmaceut. p11
Perlegen Sciences p3
Pfizer p5
Pharmacyclics p5
PharmaFrontiers p11
PhotoThera p7
Pinnacle Health System p9
Pluristem Life System p11
PML Microbiologicals p8
Polaris Venture Partners p7
Precision Optics p11
Predix Pharmaceuticals p5
Prelude Trust p8
Progenics p5
ProQuest Investments III p11
Protez Pharmaceuticals p8
Psilos Group Management p7
PSMA Development p5
Q
Quaker BioVentures p8
QuatRx p3
QuestMark Partners p4, p7, p8
QVT Fund p7
R
R.J. Reynolds Tobacco Company p6
R2 Technology p5
RA Capital p7
Radiation Therapy Svs. p5
Recordati SpA p5
Red Abbey Ventures p10
Reedland Capital Partners p11
Renaissance PME p8
Replidyne p3
Ridgeback Capital Management p8
Riverbank Capital Securities p11
Robert W. Baird p3
Robert Wood Johnson Foundation p4
Rochester Medical p5
Roth Capital p11
Roth Capital Partners p11
RRD International p2
S
Sciona p8
SCOLR Pharma p11
Scottish Widows Invstmt. Prtnrshp. p8
SD Pharmaceuticals p5
SeniorCare at the Fountains p5
Serologicals p6
Shearman & Sterling p1
Siemens Medical p6
Siemens Medical Solu. p5
Siparex Ventures p7
Sirtris Pharmaceuticals p7
SkinMedica p8
Skyline Ventures p7
SmartCare Family Medical Centers p9
Solstice Capital p7
Sonus Pharmaceuticals p11
Sorenson Development p7, p9
Spectranetics p3
Spiration p8
Sprout Group p4
SRKP 4 p9
Sterling Venture Partners p4
Summex p5
Sunesis p3
Suros Surgical Systems p5
Sybron Dental Specialties p5, p6
Symphony Capital p1
Symphony Dynamo p2
Symphony GenIsis p2
SyntheMed p11
Synthetic Blood Intl. p3
T
Taglich Brothers p11
Take Care Health Systems p9
Tapestry Pharmaceuticals p11
Targacept p4
Tavistock Life Sciences p7
Teknoinvest p8
Telegraph Hill Partners p7
Teranode Corporation p9
The Vertical Group p7
Theranox p8
Thomas Weisel Partners p1
Three Arch Partners p7
Three Arch Partners p8
TPG-Axon Capital p7
Trinity Biotech p11
Trinity Ventures p8
TVM Capital p7, p8
U
UBS Investment Bank p10
UV Partners p7
V
Valentis p3
Vanda Pharmaceuticals p4
Venture Incubator AG p8
Versant Ventures p8
VISICU p1
W
Wachovia Securities p1
Walgreen’s p9
Warburg Pincus p7
WebMD Corporation p5
Weiss, Peck & Greer Venture Partners p4
Wellcome Trust p7
William Blair & Company p1
Windrose Medical p3
WT Investment Advisors Fund p7
X
Xenon Pharmaceuticals p7
Y
YM BioSciences p5 |
Strategy For The Sweet Sounds of Success?
Email Editor
One man who has witnessed
firsthand the “tremendous explosion” in the number of biotechnology and
biopharmaceutical companies during the past several years is Mark Kessel,
founding partner of Symphony Capital LLC. During the same time he
has seen the pipelines of large pharmaceutical companies weaken.
Meanwhile, Mr. Kessel himself was busy becoming the leading dealmaker for
just the type of transaction that both Isis Pharmaceuticals, Inc.
(NASDAQ: ISIS) and Dynavax Technologies Corporation (NASDAQ: DVAX)
announced during April 2006. In each of the transactions, which total
$125 million, Symphony and a biopharma partner have established and
invested in a separate collaborative entity that will continue trials and
development on specific compounds.
More than two decades ago,
Mark Kessel started out at Shearman & Sterling, where he began
working on R&D limited partnerships. Mark says it is serendipitous that
he has achieved his current status, and he has done some hard work to get
there—in terms of legal structure, he invented the form that Symphony
currently uses to partner with companies. Ideally, Symphony will assist
these companies in advancing promising compounds, and then get bought out
by its biotech partners. Advantages to this structure include the
off-loading of risk, and potentially, the ability to bring a compound from
the early stages to the late stages, which puts the biotech in a stronger
position to partner more profitably with a big pharma.
Of course, Symphony is
expecting to realize a return on its investments, and has built into the
deals specific buyout prices at which the biotechs could reacquire their
assets at any time during the collaboration. With $315 million under
management, to be invested in development stage programs through
collaborative entities, New York City-based Symphony specializes in the
project-specific financing of partnership opportunities in the
biopharma-ceutical sector. The firm announced one deal last year and one
the year before, for a total of four, in which Symphony Capital has
provided financing and established a new business in collaboration with a
biopharma.
Three key characteristics
that Symphony looks for in its partners include the possession of
multiple, promising drug candidates; development timelines that allow
good opportunities for the firm to get bought out at different points;
and trials that line up with each other in the desired time frame. The
firm, whose team members are entrenched in the industry, actually partners
with a very small percentage of the companies that it reviews. Although
we do not know of any other firms that have the same specific focus and
investment style as Symphony, Mr. Kessel anticipates others will join the
space upon Symphony proving that its approach is successful.
In addition to the expertise
of the Symphony team, the companies that the firm invests in are supported
by RRD International, LLC, Symphony’s clinical development
partner. RRD, a product development company, provides biotechs, pharmas,
biopharmas and device makers with strategic planning and operational
support in the areas of FDA interaction and the design, management and
execution of clinical trials, which helps Symphony’s biopharma partners
get trials done more quickly and effectively.
Getting back to the deals
announced during April, a total of $873 million in private equity was
invested in 31 deals. Among them, Isis Pharmaceuticals secured $75
million in funding, and Dynavax Technologies secured $50 million, from
Symphony Capital. As a result of these transactions, two new entities
have been formed: Symphony GenIsis, Inc. and Symphony Dynamo,
Inc.
Symphony GenIsis is being
capitalized with $75 million, which will fund the development of three
drug candidates in Isis’ pipeline. With the proceeds of the financing,
one Isis compound will be taken through registration-supporting clinical
studies in patients with familial hypercholesterolemia and through Phase
IIb clinical trials in patients with high cholesterol. In addition, two
other compounds that are expected to have applications in the treatment of
diabetes will be developed through initial proof of concept. Isis granted
a license to the intellectual property, but retains the exclusive right to
reacquire those assets by purchasing all of the equity of Symphony GenIsis.
In addition, Isis granted the investors a five-year warrant to purchase
shares of its common stock at a premium. Isis will consolidate the
financial results of Symphony GenIsis into its financial statements.
Symphony Dynamo, which will
be capitalized initially with $20 million, plus an additional $30 million
within one year, is dedicated to the development of DVAX’s cancer product
candidate and its hepatitis B and hepatitis C therapeutic product
candidates. The term of the collaboration agreement is five years.
Dynavax has granted a license to the intellectual property for the
compounds, but has the option, from one to five years after the closing
date, to acquire all of the programs through the purchase of all of the
equity in Symphony Dynamo. And Dynavax issued five-year warrants to
Symphony Dynamo investors, to purchase shares of DVAX’s common stock at a
premium. Beginning in the second quarter of 2006, Dynavax will
consolidate into its own financial statements the results of Symphony
Dynamo’s operations.
The risk for Symphony and
its partners lies in the drugs they develop. For example, trials
revealing an unacceptable toxicity profile could cause the development of
a drug candidate to be halted, even if it has therapeutic benefits. But
Mr. Kessel noted that in addition to doing financial due diligence, the
firm has clinical experts assess the compounds that it considers, in an
effort to invest in drugs that will address very significant needs and
markets. He says the main reason he stays in this industry is that he
can think of no other with greater psychic rewards, meaning the
satisfaction of bringing to market a quality drug that will help a large
number of people who need it. And, successful development also means
financial rewards.
The companies that partner
with his firm, he says, place a great deal of trust in the team members,
as well they should—they are concerned with protecting the money invested
by them, their limited partners and co-investors. Symphony intends to be
sure its money is being spent wisely, to the end that in the process of
gaining a return on investment, the firm helps a biotech to avoid
prematurely out-licensing a compound and capture value for its
shareholders. The firm expects to make four to six more investments with
its first fund, and then will look at raising a second, probably larger
fund.
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