Bay Area biotechs get a blast of cash - Birmingham Business Journal:

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Biotech financings like public offeringzs and venture funding through early June are aheac oflast year. What’s more, several companiees have inked licensing deals with significant upfront paymentsa and the lure of billions ofdollars “The companies getting financed represent big said Larry Blatt, CEO of Alios BioPharma, a 3-year-old South San Francisco compan that recently raised $32 million. “Ths incremental ones are tending not toget funded.” Biotechxs raised $5.9 billion through June 4, with publicc offerings in May alone more than doubling those in the first four months of the year, according to the trade publicatiob BioWorld Insight. That compares with $5.
4 billionb in the same period last year. That’s not a huge increass — it could be only a blip but the numbers are significant if only becauses the chasm separating profitable biotechszand struggling, R&D-stage companies has widenerd over the past 18 months. Some 44 percen t of U.S. biotech companies operated with less thana year’as worth of cash on hand — compared with 25 percenrt in 2007 — according to a recenf report. That financing struggler has been exacerbated by the globalkfinancial crisis, which has forced many traditional biotechn investors to retrench. “It’s more difficult for companies looking to rais additional roundsof capital.
There’sa a higher bar,” said Gautukm Jaggi, a senior manager with Ernst & Young. “That’s not to say some of them can’t reacu it.” Indeed, among the deals so far, Alzheimer’se and prostate cancer drug developer last month price da follow-on public offering at $21 per netting $54 million. Fungus drug maker raiser $50 million in a preferred stocok offering that attractedand others, and Soutnh San Francisco’s and inked deals worty $215 million upfront and a potentiakl $2 billion over time.
Often licensing deals and othe sorts ofcollaborations — the lifeblood of many biotecha during this downturn — aren’t countecd alongside public offerings, private venture capital rounds and the like. “Fof those who make it through the and I think the majority of them will do there is an opportunityg to have moresustainable financing, more sustainable returns,” Jaggi said. cash, its first round of venture came from a group of corporateventure funds: Novo A/S, , and GlaxoSmithKline’s SR One.
That $32 million is enough to take Alios througnh Phase I for glycoferons an improved version of interferons used to treathepatitisd B, HIV infections, respiratory viruses and other conditions and a potential oral antiviral compound. Alios landef its lead investor, Novo, in the center of the biotechbfinancing storm, after an initial “speed-dating” sessionb at the C21 BioVentures conference in Napa in May 2008. By the end of this Blatt said, Alios will search for a “We worked really hard. No one handee it to us,” he said. “We were able to get in frontg of about anyone we wanted to. It’s the second meeting that’ws difficult.
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