OncoMed offers $115M IPO bet on cancer stem cell work

Posted under Bayer, Biotech IPO, Blog, cancer stem cells, Companies, Diagnostics, Funding, GlaxoSmithKline, Medical Devices, Medical Supply, OncoMed Pharmaceuticals, Pharmaceuticals, Pipeline, Startups, Universities, Verastem, Videos, Wnt pathway by john

A year after scoring a $20 million milestone from Bayer, OncoMed Pharmaceuticals is preparing to see if it can generate enough excitement from investors for its cancer stem cell work to support a $115 million IPO.

Jefferies, Leerink Swann, Piper Jaffray and BMO Capital Markets are listed as underwriters.

Redwood City, CA-based OncoMed has some of the biggest partners in the business, which has helped fund the company since it was founded in 2004. In its filing with the SEC, the biotech says it has raised $187 million in equity financing and $112 million in collaboration cash.

Bayer's payday arrived less than a year after the pharma giant struck a $387 million development deal for each new cancer stem cell and protein therapeutic program targeting the Wnt pathway. The antibody OMP-18R5 was the first of these programs to make it into the clinic. OncoMed also struck a partnership deal with GlaxoSmithKline ($GSK) back in 2007 on anti-cancer stem cell treatments. 

OncoMed may find a cool reception among investors. Like a lot of developers, OncoMed has no products. And it doesn't have any pivotal trials to whet investors' interest. It is, though, focused on a hot field in cancer drug development; a story line that has buoyed startups like Verastem ($VSTM), one of a few successful IPOs this year.

One point in OncoMed's favor: Several biotech IPOs have managed to hold their own with investors in the first few months of 2012, with prices edging upward. For some developers, that's a good enough reason to take their IPO plans off hold and push ahead after three years of near dormant IPO activity.

- here's the S-1
- read the Reuters story

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Company 'insiders' left with 43% of Verastem's shares

Company ‘insiders’ left with 43% of Verastem’s shares

Posted under Biotech IPO, Blog, cancer stem cells, Christoph Westphal, Companies, Diagnostics, Funding, Medical Devices, Medical Supply, Pharmaceuticals, Startups, Universities, Verastem, Videos by John Carroll

Anyone trying to understand what it takes to pull off a successful biotech IPO these days should check out a series of 13Ds Verastem's ($VSTM) insiders filed last month. In the days after Verastem went public the insiders noted that they had collectively acquired 43% of Verastem's stock. And Christoph Westphal's Longwood Fund captured the biggest share--taking home 13.63% of the offering.

Westphal founded Verastem, a preclinical drug developer focused on cancer stem cells, and then quickly went public at a stage when most such developers could only dream about an IPO. Westphal, though, has some of the best connections in the industry after selling Sirtris to GlaxoSmithKline ($GSK) for $720 million and going on to run GSK's venture arm briefly. He runs Longwood along with Rich Aldrich and Michelle Dipp. The other insiders, Bessemer, CHP and MPM each nabbed close to 10% of the IPO shares.

Over the past three years only a handful of biotechs have managed to pull off an IPO without taking a big haircut on the share price. And in most cases that required some big help from the companies' insiders. That's a point that has been openly acknowledged by Ironwood CEO Peter Hecht, who could count on some big insider help when he took the biotech public.

It's also no surprise to Bruce Booth, a partner at Atlas Venture who has been closely following the trend. In a tweet this morning Booth noted that while he hadn't personally run the numbers, 43% wouldn't be radically out of line with the numbers he's seen. That level of insider participation is only marginally higher than the 33% median on insider buying for big biotech IPOs, notes Booth.

- here's the 13D from the Longwood Fund

Correction: After we published today's report I had a chance to talk to Robert Forrester, the COO at Verastem and an experienced biotech exec in his own right. Forrester corrected the bottom line of the report, noting that company insiders had limited themselves to buying $14.8 million in IPO shares, which amounted to 23% insider participation of the $63.3 million raise. The 43% insider stock ownership is a combination of all the shares they own, from both pre- and post-IPO buys. "We had such a strong demand for the IPO that we asked the existing investors if they would scale back," says Forrester. "Most didn't want to, but a couple did." FierceBiotech regrets the mistake. -- John Carroll
 

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Osteoporosis drug developer Radius Health braves chilly IPO market

Posted under BA058, Biotech IPO, Biotech Venture Capital, Blog, Cempra Pharmaceuticals, Companies, Diagnostics, Funding, Ipsen, Medical Devices, Medical Supply, Merrimack Pharmaceuticals, osteoporosis, Pharmaceuticals, Radius Health, Startups, Universities, Verastem, Videos by John Carroll

After burning through more than $122 million, the late-stage osteoporosis drug developer Radius Health is filing to go public in the hope of raising up to $86 million. Radius is betting that it can whet the appetite of investors with the prospects for its pivotal trial for BA058. But over the past three years investors have been quick to pass on such offerings, put off by the heavy risk of failure that dogs every drug program.

Radius Health in-licensed BA058 from Ipsen and has been studying the treatment's ability to build bones in osteoporosis patients. As FierceBiotech noted in December, when the Cambridge, MA-based biotech drew down another tranche of its last $91 million venture round, Radius believes that it can significantly improve on current treatments, which are designed to slow bone loss and reduce pain in patients. Radius is also partnered with Eisai on a midstage treatment for hot flashes without the side effects associated with hormone therapy.

Radius, which is helmed by former Genzyme CFO Michael Wyzga, plans to list on Nasdaq under the RDUS symbol. The biotech did not list the number of shares it plans to offer or a price range.

Biotech IPOs have generally received rough handling on Wall Street. With the help of its backers, Christoph Westphal pulled off a successful initial offering for Verastem ($VSTM) recently. But Cempra's experience last week is more common. The company had to cut its share price in half and boost the number of shares sold to raise $50 million. Merrimack, a Boston biotech with five programs, recently pulled its IPO, citing market conditions.

A successful IPO here would be a coup for Radius' investors: MPM Capital, BB Biotech Ventures, MPM Bio IV NVS Strategic Fund, The Wellcome Trust, HealthCare Ventures and Scottish Widows Investment Partnership.

- here's the S-1 form on file at the SEC
- read the story from the Boston Business Journal

Special Report: The 10 biotech IPOs of 2011

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Westphal pulls off a rare stunt with $55M Verastem IPO

Posted under Biotech IPO, Blog, Christoph Westphal, Companies, Diagnostics, Funding, Medical Devices, Medical Supply, Pharmaceuticals, Startups, Universities, Verastem, Videos by John Carroll

Christoph Westphal's Verastem, a preclinical-stage biotech focused on cancer stem cell research, seemingly defied gravity with an announcement late last night that its IPO raised $55 million from the sale of 5.5 million shares at $10 apiece. The price fell precisely in the middle of its range, qualifying it as a unicorn among the rare breed of companies that play in this field. And Verastem actually upped the offering by a million shares over what had originally been planned.

What the company's release fails to note is how much Westphal, a venture capitalist himself with a broad range of connections in the investment world, put up along with the biotech's other backers. In an earlier SEC document, Verastem noted that investors had agreed to buy up to $16.3 million of the offering, a common ploy among the developers which have pulled off the occasional successful IPO over the past three years. With more than 19 million common shares outstanding, the offering values Verastem at $192 million.

Even so, analysts in the IPO field had a hard time understanding the logic behind a preclinical biotech IPO at a time late-stage companies are often given short shrift. This month has seen few initial offerings of any kind, noted Dow Jones as it reviewed one skeptically. "Verastem's is even less attractive," wrote Lynn Cowan, "with neither revenue nor profits, and a potential product pipeline that hasn't yet begun full clinical trials."

The company starts trading today under the $VSTM symbol, joining a small group of biotechs going public. As we noted in a recent special report, only 10 biotechs went public last year, down from a meager 13 in 2010.

This isn't the first time that Westphal has managed to pull off a financial coup for a high-risk company. He launched Sirtris and sold it to GlaxoSmithKline ($GSK) for a whopping $720 million, and GSK has stood by the company as researchers have raised serious questions over the science involved. Later he had a brief stint as the head of SR One, GSK's investment arm. And he founded Longwood Founders Fund, which has a 15.4 percent stake in Verastem. Other backers include CHP with 13.5 percent; MPM Bioventures with 13.1 percent; Bessemer Venture Partners with 12.9 percent; Eastern Capital Limited with 7.8 percent; and Advanced Technology Ventures with 5 percent, as Xconomy notes in its coverage of the event.

- here's the press release
- read the story from Xconomy

Special Report: The 10 biotech IPOs of 2011

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