VentureBeat

Featured companies: Cerus, LabNow, Reliant Pharmaceuticals

UPDATED: Expanded items on Reliant Pharmaceuticals and Cerus.

GSK acquires Reliant Pharma for $1.65 billion — And then there were none. Reliant Pharmaceuticals, a Liberty Corner, N.J., specialty pharma that filed for an initial offering back in August, has instead decided to sell itself to GlaxoSmithKline for the eye-popping sum of $1.65 billion. The release is here. The acquisition news comes just days after doppelganger Reliant Technologies abandoned its own IPO bid (see our coverage here).

Although that sum is pretty large, it’s a mere 18 percent premium over the $1.4 billion market capitalization Reliant Pharma would have fetched had it priced at the top of its expected per-share range at $27. As we noted earlier — see our previous coverage here and here — Reliant is kind of a mixed bag insofar as specialty pharma companies go. It yanked an earlier attempt to go public back in 2005, and remains unprofitable despite pulling down $360 million in revenue for the first nine months of this year.

Reliant sells four unrelated cardiovascular drugs, the most significant of which is Lovaza, an omega-3 fatty-acid pill for people with high levels of triglycerides. Although GSK touts it as the only omega-3 supplement “clinically proven” to reduce triglyceride levels in adults with high triglycerides, it’s kind of hard to imagine that this really sets it apart from all the other omega-3 supplements you can find on the shelves of your local drugstore or supermarket. (Here at Chez Hamilton, we take the Costco house brand fish-oil supplement, which is plenty high in omega-3s, even if it hasn’t been “clinically proven” to reduce triglycerides. For Reliant’s song-and-dance as to why Lovaza is superior to fish-oil supplements, click here.) Yet Lovaza is exactly what GSK touts as its reason for dumping a billion-plus bucks of its shareholders’ money on this company.

Don’t think that Reliant has a secret weapon in its labs, either –because, you know, Reliant doesn’t really have labs. Like most specialty pharmas, it’s a bottom-feeder, acquiring drugs that no one else wants or can find a good use for. That can be a perfectly good business, and there’s no question that Reliant’s shareholders have done well in this transaction, but no one should mistake what companies like Reliant do for actual innovation. As for why GSK thinks this company is so valuable — well, chalk it up to desperation and the madness of crowds.

Cerus spins out venture-backed immunotherapy unit — Concord, Calif.-based Cerus is spinning off its cancer-vaccine program into a new, and as-yet unnamed, venture-backed company. The release is here.

Cerus will focus its own efforts on its Intercept blood-safety system, which theoretically neutralizes viral and bacterial pathogens in donated blood using a small molecule that binds to DNA or RNA and “cross-links” the molecules, rendering them incapable of replication. Intercept has had tough sledding in the U.S., but is approved in Europe.

Cerus didn’t identify backers of the new immunotherapy company, although it said David Cook and Thomas Dubensky have joined it as CEO and chief scientific officer, respectively. Cerus will retain a 16 percent interest in the new company, and is eligible for milestone payments of more than $90 million, plus royalties, should any of the new company’s vaccines pay off.

OTHER HEADLINES OF NOTE:

• Cerus spins out venture-backed immunotherapy unit (release)
• LabNow receives $20M for AIDS blood-analysis device (release)

Bioheart’s IPO-related chest pains continue — The week of Oct. 22 has come and gone, and there’s no sign of the scheduled — and already battered — IPO of Bioheart, the Florida company that hopes to treat damaged hearts with patients’ own muscle stem cells. IPO Home now lists the IPO as scheduled on a “day-to-day” basis.

So the jury is still out as to whether the company’s recent halving of its IPO terms will still get it out the gate, but the signs aren’t good. By the way, my last piece on the company — which, admittedly, was a tad on the snide side — drew a critical comment from someone identifying themselves as “Peggy Farley.” According to Bioheart’s latest SEC filing, Peggy Farley is a Bioheart board member, the CEO of Ascent Capital Management and the beneficial owner of 494,410 Bioheart shares. I don’t have any independent confirmation that the commenter and the Bioheart director are one and the same — among other things, the commenter used a Hotmail account — but it’s interesting nonetheless.

Bioheart isn’t the only life-sciences startup in this pickle. Merrion Pharmaceuticals, an Irish company that rejiggers existing drugs, was scheduled to go out last week and is now also scheduled on a “day-to-day” basis. (Our coverage of the company is here.) Of course, even Merrion’s situation looks good compared to Cumberland Pharmaceuticals, which is still listed as “day-to-day” and has been since mid-August (see, for instance, a mention in the Zars item here).

Reliant vs. Reliant — One of the oddest doppelganger acts in the life-sciences financing world has hit the road. Back in August, I thought it odd when Reliant Technologies — a Mountain View, Calif., medical-laser startup — filed for an IPO just three days after New Jersey-based specialty pharma Reliant Pharmaceuticals had done so. That apparently wasn’t enough, though, as this week both companies set their IPO terms back to back. The companies’ latest SEC filings are here (Reliant Pharma) and here (Reliant Tech).

Can investors keep these road-tripping twinsies straight? Let’s take a look:

Specialty
Reliant Pharma: Cardiovascular disease
Reliant Tech: Skin “rejuvenation”

Maximum IPO take
Reliant Pharma: $364 million
Reliant Tech: $86 million

Proposed ticker symbol
Reliant Pharma: RRX
Reliant Tech: RLNT

Potential Market Capitalization
Reliant Pharma: $1.4 billion
Reliant Tech: $236.6 million

Good luck, investors. We’ll be thinking of you.

Life-sciences IPOs scheduled this week:

• Akela Pharma
• Genoptix (our coverage)
• Nanosphere (our coverage)

Featured companies: BioVex, Cavadis, Innovention, Paratek Pharmaceuticals, Phase Bioscience, Reliant Pharmaceuticals, Xencor

UPDATED: Expanded Paratek and Xencor items.

Paratek Pharma raises $40M for new antibiotics — Boston’s Paratek Pharmaceuticals, a biotech working on new antibiotics to treat drug-resistant bacterial infections, raised a first tranche of a $40 million eighth round of funding. The company’s release is here, VentureWire (subscription required) has more details here.

Investors in this funding included Aisling Capital, D.E. Shaw, Boston Life Science Venture Corporation, Nomura Phase4 Ventures, Novartis BioVentures, BioFund Ventures, HBM BioVentures, Lombard Odier Darier Hentsch, BioVeda Fund and Hercules Technology Growth Capital. Paratek’s lead drug candidate, PTK 0796, is being studied against skin-structure infections and community-acquired pneumonia.

Xencor raises additional $15M for cancer, immune-disease drugs — Xencor, a Monrovia, Calif., biotech developing “engineered” protein- and antibody-based drugs, raised an additional $15 million in its fifth funding round, bringing the total to $60 million. Investors included Oxford Bioscience Partners, Merlin Nexus, Novo Nordisk, MedImmune Ventures, HealthCare Ventures and Zen Investments.

Xenocor’s lead candidate is an antibody that could target Hodgkin’s disease and T-cell lymphoma. The company expects to begin early-stage human trials later this year.

HEADLINES OF NOTE:

• Protein purifier Phase Bioscience pulls in an additional $5.4 million (American Venture Magazine)
• Reliant Pharma trims IPO plans, aims for $364M offering (Edgar)
• Cavadis, developer of diagnostics for “vulnerable” coronary plaques, raises seed funding (PDF release)
• Innovention Tech pulls in $115,000 for new surgical probe (release)
• BioVex names Jan van Heek chairman (release)

(UPDATED: See below.)

Featured companies: FoldRx Pharmaceuticals, Ophthotech, Pevion Biotech, Restoration Robotics, Glide Pharma, Reliant Pharmaceuticals, Nanosphere, SurModics, BioFX Laboratories

FoldRx Pharma to receive $22M against cystic fibrosis — Cambridge, Mass.-based FoldRx Pharmaceuticals, a biotech focused on diseases that result from misfolded proteins, will get $22 million over the next five years from an affiliate of the Cystic Fibrosis Foundation to further its work against the genetic lung disease. The money will be paid as FoldRx meets various developmental milestones, including pushing two experimental drugs into early-stage human trials. The company’s current drug candidates, however, don’t target cystic fibrosis, and instead aim to take on a particular class of diseases known as amyloidosis and Parkinson’s disease.

The Boston Globe and the WSJ Health Blog have more.

Newly formed Ophthotech raises $36M against eye disease — Ophthotech, a newly formed Princeton, N.J., biotech with a focus on eye disease, raised a whopping $36 million in a first funding round. The company, founded by a bevy of former Eyetech Pharmaceuticals officials, is going to follow directly in the former company’s footsteps by taking aim at age-related macular degeneration with aptamers licensed from Archemix (which we wrote about here).

Investors in the round included SV Life Sciences, HBM BioVentures and Novo A/S. (See update below.)

Pevion Biotech gets $29M for vaccines — Pevion Biotech, a Bern, Switzerland-based vaccine developer, raised $29 million (CHF35 million) in a first funding round. Investors included BZ Bank Aktiengesellschaft, BB Biotech Ventures II, CC Private Equity Partners and Bachem Holding. The company is conducting clinical trials of vaccines against malaria, breast cancer and hepatitis C.

Hair-transplant automator Restoration Robotics raises $25M — Restoration Robotics, a Mountain View, Calif., developer of robotic surgery systems for hair transplants, raised $25 million in a second round of funding, PE Hub reports. The company’s Web site is a stub and the linked article doesn’t contain much information, but an April VentureWire store republished at Alta Partners’ site gets to the root of the matter:

Sutter Hill Ventures and Alloy Ventures, for example, have invested in the first and second rounds raised in 2005 and 2006, respectively, by Restoration Robotics Inc., which is testing a robotic device that performs hair transplants. Transplant-surgery outcomes vary according to the surgeon’s skill. Restoration’s robot — which is surgeon-controlled — produces uniform results in half the time, says CEO Jim McCollum. Investors hope this pushes hair transplants into the mainstream. Today, “people think of late-night commercials when they think of hair restoration,” says Sutter Hill Managing Director Jeffrey W. Bird.

Investors in the round include InterWest Partners, Alloy Ventures and Sutter Hill Ventures.

Glide Pharma raises $4.6M for needle-free drugs — U.K. specialty pharma Glide Pharma raised $4.6 million (£2.3 million). Investors included Oxford Technology 4 VCT and Oxford Capital Partners. The company is developing drugs that can be delivered via its own needle-free injection system. We’ve written about other startups pursuing similar technology, including StrataGent Life Sciences and Macroflux.

Reliant Pharma refiles for a $400M IPO — Reliant Pharmaceuticals, a Liberty Corner, N.J., specialty pharma that withdrew a planned $300 million IPO in 2005, is going to try again, only with more at stake. The company filed to raise as much as $400 million in an offering, despite the fact that it is on track to lose more than $100 million this year, which would be the third time in four years it has done so.

In the first six months of this year, Reliant reported a net loss to common shareholders of $56.4 million on revenue of $230 million. That net loss would have been only $21.8 million but for preferred-share dividends of $34.6 million in the half. Reliant sells a variety of unrelated second-hand drugs for cardiovascular problems.

Interestingly enough, Reliant made its last charge at the public markets with the famed Ernest Mario at the helm. Mario jumped from Reliant just last week, and is now CEO of the little-known Capnia (see our coverage here).

Nanosphere aims for outsized $100M IPO — Nanosphere, a Northbrook, Ill., developer of nucleic-acid and protein detection and diagnostic systems, filed to raise as much as $100 million in an IPO. As of March 31, the company had an accumulated deficit of $112.6 million. Earlier this year, it submitted its Verigene molecular-diagnostic system to the FDA for approval; Nanosphere intends to market the device to hospital laboratories that currently aren’t equipped to perform such tests in-house.

SurModics snaps up diagnostic-supply company BioFX for up to $22.7M — SurModics, an Eden Prairie, Minn., developer of drug formulations and other biological supplies, agreed to acquire BioFX Laboratories of Owings Mills, Md., for $11.3 million in cash and milestone payments worth up to $11.4 million. The release is here. The acquisition is the second for SurModics this month; it bought out Brookwood Laboraties on Aug. 2 (our coverage is here).

UPDATE (2:37pm PT): Added items on Glide Pharma, Reliant Pharmaceuticals, Nanosphere, and SurModics/BioFX Laboratories.

UPDATE REDUX: Over at Pharma’s Cutting Edge, Fred Cohen notes what I didn’t have time to, which is that Ophthotech essentially amounts to a do-over for the architects of Eyetech’s failure. Check it out.