Life remains difficult for small biotech companies as the climate for raising capital continues to be harsh. Diagnostic company Nanogen filed for Chapter 11 bankruptcy protection after the collapse of its planned merger with the privately held French diagnostics company Elitech. In its filing, Nanogen reported assets of $14.7 million and debts of $41.5 million as of the end of March. Nanogen is seeking to sell most of its assets to Elitech for $25.7 million. Nanogen's European affiliate, Nanogen Advanced Diagnostics, is not part of the bankruptcy filing. Nanogen has lost more than $400 million since it went public in 1998. In its heyday, its stock was trading as high as $100 a share, compared to just 4 cents a share now.

 

New Jersey-based Genta announced it will run out of cash in June. The company says if it is unable to raise additional funds, “it could be required to reduce its spending plans, reduce its workforce, license or sell assets or products it would otherwise seek to commercialize on its own, or file for bankruptcy." Genta reported it had cash and cash equivalents of $600,000 as of the end of March and reported a net loss of $11.1 million for the first quarter of 2009. Genta has been struggling since early 2008 when the FDA rejected its lead therapy Genasense. The company cut its staff in half and started searching for capital, eventually issuing $20 million in senior secured convertible notes in June.

 

FDA rejection spelled doom for another small biotech last week. This time it was Northfield Laboratories, which announced it was laying off all of its employees and closing down. The FDA rejected its blood substitute PolyHeme, which Northfield had spent 20 years developing. After two years of frustrated attempts to gain approval of the drug, the FDA said the risks associated with PolyHeme outweighed its benefits. More patients given the blood substitute died after 30 days compared to patients given regular blood.

 

Genaera's board of directors decided to close the company after more than 30 years in business, pending shareholder approval. Since its inception in 1987, the Plymouth Meeting, Pennsylvania-based company had funded its operations through a variety of public and private stock placements, contract and grant revenue, research-and-development expense reimbursements, interest income, and the sale of tax credits. In the summer of 2007, the company began to explore licensing or partnership deals for its experimental drugs but has met with little success. With $5.3 million in capital and $2 million in liabilities as of the end of March, Genaera's board decided to call it quits.

 

As biotech companies prepared for the 2009 BIO International Convention, deal-making in the life sciences slowed to a crawl, with Big Pharma continuing to play a major role, especially in the global deal-making arena. GlaxoSmithKline increased its presence in Africa, with the acquisition of a 16 percent stake in South Africa's Aspen Pharmacare, Africa's largest generic pharmaceutical company in an asset swap valued at $418 million. Sanofi-aventis was also busy, buying the U.S. rights to British biotech Antisoma's oral fludarabine, an FDA-approved treatment for chronic lymphocytic leukemia for $65 million. In a separate deal, Sanofi acquired an exclusive to a preclinical anti-light fully human monoclonal antibody from Kyowa Hakko Kirin of Japan to develop as a treatment for ulcerative colitis and Crohn's disease. The license is worth up to $315 million for Kyowa in upfront fees and potential milestones and royalties. The companies will share co-promotion rights in Japan and Asia.

 

A significant biotech collaboration came through at the end of the week as privately held Louisville, Colorado-based GlobeImmune and Celgene entered into a worldwide strategic oncology collaboration based on Tarmogen technology. Tarmogens (targeted molecular immunogens) are whole, heat-killed recombinant S. cerevisiae yeast that express antigens from one or more disease-related proteins. GI-4000, the lead oncology program under this collaboration, is a series of Tarmogens that are intended to generate a T cell immune response against cells containing proteins encoded by a mutated ras oncogene. GI-4000 is currently in a Phase II trial in patients with pancreatic cancer.

 

Under the terms of the agreement, GlobeImmune will get $40 million in an upfront payment from Celgene, which includes an equity investment in GlobeImmune. In return, Celgene has an exclusive option to all of GlobeImmune's oncology programs on a program by program basis. GlobeImmune will conduct the early development and Celgene will have the option to obtain an exclusive worldwide license to develop and commercialize any products arising from the collaboration. GlobeImmune is also eligible for over $500 million various milestones and royalties.

 

Finally, a total of $155 million in venture capital was raised during the week. North Carolina-based Cempra Pharmaceuticals, a clinical-stage company developing novel antibiotics for difficult-to-treat and drug-resistant infections, raised $46 million in a Series C financing which was led by Quaker BioVentures and included Devon Park Bioventures, as well as original investors, Aisling Capital, Intersouth Partners, investment banker Wistar Morris III, and Teachers’ Private Capital. The funds will be used for the continued clinical development of Cempra's lead compound CEM-101 for community-acquired bacterial pneumonia, CEM-102 for MRSA, and other preclinical stage, non-antibacterial macrolide programs. A mid-stage clinical trial of CEM-101 is expected to begin later this year. CEM-102 has already been approved in other countries and Cempra is preparing for Phase II/III adaptive trials in the U.S. Cempra was founded three years ago and has just 12 employees. The company had raised a total of $32.4 million before this recent round.