cancer vaccine wave sweeps transgene

Cancer Vaccine Wave Sweeps Transgene to $181M Offering

Jun, 09, 2010 12:01 AM - BioWorld Today

Completing what may be European biotechnology's largest fundraising transaction this year, Transgene SA grossed €152 million (US$181.4 million) in a rights offering directed at existing shareholders. After expenses, the company will have net proceeds of around €148 million, which will take its total cash reserves to around €200 million.

Transgene is now among Europe's most secure biotechnology companies, with sufficient funds for the next five to six years, and a couple of clinical development projects that could reach the market well before then.

The offering was priced at €16 per share, a slight discount to Transgene's closing price of €16.21 on May 5, immediately before the company decided to launch the offering. Shareholders, who were entitled to subscribe for three new shares for every seven shares held, took up 81 percent of the 9,498,621 shares offered. The rest were placed, via an accelerated book-building process, with French and international institutional investors. Trading in the new shares began Monday on the Euronext exchange in Paris.

The success of the transaction is a boost for the field of cancer immunotherapy, which was already buoyed by the recent FDA approval of Dendreon Corp.'s Provenge (sipuleucel-T) in prostate cancer. (See BioWorld Today, April 30, 2010.)

That in itself did not have any direct bearing on the outcome of the Transgene offering, Philippe Archinard, CEO of Strasbourg, France-based Transgene told BioWorld Today. However, bad news for Dendreon could have spelled bad news for Transgene. "I think it would have been a big negative had Provenge failed to gain registration," Archinard said.

A big positive for Transgene was the decision by its majority shareholder, Lyon, France-based Institut M?rieux, to maintain its 55.2 percent stake in the company. Transgene's deal-making capabilities also helped. In March, it entered an option agreement with Novartis AG, of Basel, Switzerland, on its lung cancer vaccine TG4010 (MVA-MUC1-IL2). Although that only delivered $10 million up front, it could lead to €700 million in milestones. (See BioWorld Today, March 11, 2010.)

TG4010, which comprises a modified recombinant vaccinia virus expressing the MUC1 antigen and the human cytokine Interleukin-2 (IL-2) is entering a pivotal Phase IIb/III trial in non-small-cell lung carcinoma later this year, in combination with chemotherapy. The company is currently negotiating with the FDA to obtain special protocol assessment status on the trial and with the European Medicines Agency on scientific advice.

A rival product, Stimuvax (BLP25 liposome vaccine), which Darmstadt, Germany-based Merck KGaA is developing under an alliance with Oncothyreon Inc., of Seattle, has been on hold since March, following the development of a case of encephalitis in a patient with multiple myeloma. (See BioWorld Today, March 24, 2010.)

Novartis can exercise its option following an interim analysis of data from 450 patients, which will be conducted in late 2011. It will assume all funding obligations for the program after that point, although Transgene will fund the initial part of the program. "Cash outflow for TG4010 is roughly going to be in the €10 million range," Archinard said.

Transgene also will invest upward of €40 million - in cash and debt - on upgrading its existing manufacturing facilities in 2011 and on building a new plant in 2012 that will provide it will commercial-scale production.

The company may use some of its cash to fund product in-licensing or acquisition deals, Archinard said, but the main purpose of the investment is organic development. It has two unpartnered programs in the clinic. TG4040 (MVA-HCV) is entering a Phase II trial for treatment of chronic hepatitis C infection. TG4023 (MVA-FCU1), in development for liver cancer, will deliver Phase I data later this year.

TG4001/RG3484 (MVA-HPV-IL2), which is partnered with Roche Holdings AG, of Basel, is in development for treating precancerous cervical lesions caused by human papillomavirus. A Phase IIb trial will deliver data during the second quarter of next year.