Biotech Finances Stem Cells Special by Biotech Finances

w w w. b i o t e c h - f i n a n c e s . c o m

CONTENTS Final Hour • I-Stem bridges the public-private gap............................................p. 1

Eco Note by H. ELLA

12 October 2009 – No. 434 Stem Cells Special

Final Hour

I-STEM BRIDGES THE PUBLIC-PRIVATE GAP

• New policy, new era ......................p. 2

Panorama • Stem cells: a clear and visionary law is required ........................p. 2,4

Event • Parliamentary debate on biotechnology, organized by Nixon Peabody and Biotech Finances p. 5-7

Markets • Support for Cell Medica extended with 2 M€..........................................p. 8

Interview • Stem cells: the ethical, political and legislative challenges......p. 9-10

Newsbites • Cellectis launches subsidiary dedicated to stem cells ............p. 10

Strategy watch • Europe – Israel: deals from 1 to 8 october 2009 • Buzz of the week on www.biotech-finances.com • Biotech finances index share by share..........................p. 11

WORKSHOP FRANCE BIOTECH Covering technology convergence. Three main themes: opthalmology, cardiology, diabetology. Thursday October 15th 5 to 9 pm Ministry of Higher Education and Research

“It was crucial for France to prepare itself with a solid response to the challenges posed by the legislation on embryonic stem cells”, explains Marc Peschanski, director of I-Stem. “Rather than to scatter the efforts, we have established a unique cluster that has a solid critical mass and the ability to achieve therapeutic application rapidly, together with the French National Institute for Health and Medical Research (INSERM) and the French Association against Myophathies (AFM).” From this idea I-Stem was born in 2005, financed at 50% by INSERM and 50% by AFM. Ever since, research projects in the field of embryonic stem cell (ES cell) therapy have multiplied, and programs have currently reached the preclinical phase in monkeys and should go forward to human trials within the next two years. In addition to this research objective, which was developed from treatments intended for monogenic diseases such as Huntington’s disease, IStem has created a new team specialized in skin construction using ES cells. Further programs, which are in earlier development phases, are also in progress. I-Stem’s team of directors is now looking for industrial partners to achieve the industrial potential of all these programs. The first recognition came from Roche before the summer. This giant from Basel, which was, like its main competitors, trying to get a foothold in the field of stem cells, has carried out an in-depth investigation of biotech companies with activities in this area, in order to find a

partner for a neuroscience project. The projects that the Swiss teams are interested in will never completely match the pharma’s ambitions, but word-ofmouth has done its job and I-Stem was

Up to 23.5 M€ REVENUE for I-STEM contacted by Roche a few months ago. The question was if I-Stem had the capability to screen their base of 1.4 million compounds to find out if some of them would stimulate growth and differentiation of neuronal stem cells, which would then enable them to stop the degeneration process. “The results were excellent from the start, and within two months a framework agreement was signed”, continues Marc Peschanski. With an upfront payment of 7.5 M€ and milestones that could reach 16 M€, this two-year deal is one of the most significant industrial collaboration ever signed by the INSERM on one single project. For Roche this is a dream opportunity to give new life to its pharmaceutical research. For I-Stem it means powerful validation and acknowledgement for its technology, as well as a prime ticket to negotiate codevelopment alliances on their products with other pharmas. ❚ Juliette Lemaignen jlemaignen@biotech-finances.com

Eco Note by H. ELLA

NEW POLICY, NEW ERA If there’s one area of biotechnology that’s sensitive to political decisions, it has to be the field of stem cells and regenerative medicine. We remember well how, when the Bush administration scrapped federal funding for embryonic stem cell research, just a few years ago, it practically killed off the research in that sector in the US, dragging down several other countries with it. Today, with a new administration that seems to have a better insight into the subject, the sector is experiencing a true revival, and public funding is replenishing companies in the sector. In spite of the difficult time they’ve just gone through, some products have now reached advanced phases of clinical trials (such as Cytori Therapeutics, Aastrom, BioHeart, Geron). There are plenty of indications for stem cells, such as neurodegenerative, cardiac and metabolic disorders, and the possibilities are abundant, as are the funds today. For example iZumi Bio and Pierian have merged, raising US$ 11 M from MPM Capital in the process, resulting in the

new company iPierian. Even the large pharma laboratories haven’t been left behind; AstraZeneca & Roche have launched a research consortium on stem cell research; Pfizer, still glowing with pride after the success of its regenerative medicine business unit, has invested in a spin-off of the Scripps

Institute, EyeCyte, Inc.; and GSK has signed a partnering agreement with the Harvard Stem Cell Institute. All things considered, these aren’t big moves yet, but they’re well and truly beginning to look that way. Will stem cells be our next big adventure? ❚

Panorama

STEM CELLS: A CLEAR AND VISIONARY LAW IS REQUIRED FRANCE

With the forthcoming review of the French bio-ethics law of August 2004 and the recent decision from the Obama administration, stem cells have returned to the forefront. In France, the bio-ethics law was designed strictly for research using embryonic stem cells, completely banning their use except for some universities that are renowned for their expertise in this field. Apart from the ethical debate, the decision-makers are also interested in the economic stakes: experts estimate the stem cell market at US$ 15 billion. Pharmaceutical laboratories with a wait-and-see policy and short of innovations could well be interested, after the biotechnology and the vaccine sectors. STEM CELLS IN PRACTICE There are various types of stem cells: • embryonic stem cells from fetuses from voluntary abortion, or from test tube fertilization. These are the so-called pluripotent stem cells, which are apt to differentiate into several types of cells: cardiac, nervous, skin cells, etc., • embryonic stem cells from blood in the umbilical cord after birth, an area that

France pioneers, • adult stem cells that differentiate into a limited number of tissues, and more recently • inducted pluripotent embryonic stem cells (iPS cells), which result from adult cells that have been reprogrammed into stem cells that are similar to embryonic stem cells. Note that the last two types of stem cells are not affected by the French bio-ethics law.

Stem cell research has been around for many years. Stem cells from bone marrow have been used for therapeutic purposes for a long time. Bone marrow transplants are currently used for treating acute leukemia and other disorders related to the immune system. There is also cell therapy that enables for example the permanent repair of knee cartilage using stem cells taken from the patient’s cartilage. Researchers have also discovered multipotent (continued on p. 3)

BIOTECH FINANCES • 12 October 2009 • No. 434 Stem Cells Special

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H.ELLA

Panorama

ADVANCES IN MEDICAL RESEARCH ON STEM CELLS • Cardiac diseases Recent research on mice has shown that it is possible to guide embryonic stem cell differentiation into cardiac muscle cells. • Diabetes Several laboratory research programs suggest that it’s possible to produce specialized cells that are capable of producing insulin. Further research is needed to control the growth of these cells.

The STEM CELL MARKET is ESTIMATED at US$ 15 BILLION • Parkinson’s disease American scientists have successfully created specialist neurons that secrete dopamine, a chemical neurotransmitter that fails in the case of Parkinson’s disease, from human embryonic stem cells. In other experiments in 2002 healthy stem cells were taken from the brain of a Parkinson’s patient, put into culture and transformed into neurons. The neurons that produced dopamine have been reinjected in patients, resulting in a spectacular regression of the disease. During these experiments side effects were recorded that were thought to be the result of a hypersensitivity to dopamine or to excessive levels of this neurotransmitter. Nevertheless, in spite of these side-effects the results are encouraging. • Cancer Bone marrow transplants have been used for many years to treat various types of cancer, such as leukemia for example. Currently research focuses on new immunology methods to avoid transplant rejection. In other cases, such as spinal injury, intramedullary implants of embryonic stem cells causes the regeneration of the nerves and peripheral connections through a nerve graft. This research is promising for paraplegics and tetraplegics. In retinal diseases scientists have been able to

guide stem cells into photoreceptive cells, which could give hope in degenerative retinal diseases, which often cause blindness. THE STEM CELL MARKET Many experts point out the significant economic potential of new cell therapies. According to them the stem cell market represented US$ 5 billion in 2005 and should triple by 2015. Currently we observe industrial stem cell development in three geographic areas: • The United States, which dominates the market in spite of the ban imposed on research in this field since 2001 by the Bush administration. The lifting of the ban on the use of embryonic stem cells by President Obama should increase the sector’s dynamism. • Europe, a heterogeneous zone in which regulations in terms of stem cells differ, with some countries having “permissive” policies, such as Great Britain, Belgium and some Scandinavian countries, and those with more “restrictive” policies, such as Germany, Italy, Spain and France. • China, where biotechnology research increases by between 20 and 30 % per year (US$ 3 billion between 2000 and 2005) and which is almost on a par with Europe if one considers the number of biotechnology patents registered in both zones, but still far behind the US, which is the number one in the field. In terms of stem cell patents alone, 63% of patents are deposited by American companies, and 15% by European companies, where Germany (4%) and Great Britain (4%) are in the lead. STEM CELL POLICY IN THE USA Stem cell research already has a long history in the United States, and in spite of the ban on embryonic stem cell research before 2009, three states, California, Michigan and Wisconsin have approved and even encouraged this type of research. California has created the California Institute for Regenerative Medicine (CIRM) and invested US$ 3 billion to fund this research. Furthermore, this research will be boosted by Barack Obama’s revival plan: there will be US$ 10 billion available by the end of 2009. Amongst the biotechnology companies in the United States that work on stem cells, some have specialized on embryonic lines, such as Geron, Stemride, ESI or BresaGen. Others focus on less controversial areas such as stem cells from bone marrow (Aastrom Biosciences, Osiris Therapeutics) or from the blood in the umbilical cord (Viacell, BioE, Pluristem). In

total there are just a dozen embryonic stem cell line cultivations worldwide, and authorization for the creation of lines (King’s College, 2002) in Great Britain should enable the country to penetrate the European market more easily. STEM CELL RESEARCH IN EUROPE – THE EXAMPLE OF GREAT BRITAIN The British government has made regenerative medicine a national priority. In this permissive country in the field of stem cells, a world premiere took place early January 2009: scientists received authorization to use stem cells from human fetuses to treat the damage caused by cerebral vascular accident (CVA). Great Britain is also very active in building stem cell data banks. STEM CELL BANKS Until now, it has never been possible to contemplate conserving a tissue for the entire lifetime of a human being. This could become a possibility through storage of the blood from the umbilical cord and the possibility of using the stem cells from this cord to repair organs and tissues, and cure diseases without the risk of rejection, using our own cells. So at the heart of the problem with the stem cells from the umbilical cord is the creation of storage banks. The French bio-ethics law has slowed down the creation of such banks. STEM CELLS IN DEVELOPING MARKETS, AND A PARALLEL WITH THE RISE OF THE TELEPHONE To understand the rapid rise of the field of stem cells in developing countries (Brazil, China, India, etc.), it’s interesting to draw a parallel with the rise of the telephone. A country such as China, which has struggled to build a wired telephone network worthy of the description due to the required heavy investments, a fastidious bureaucracy and the huge dimensions of the country, has succeeded in becoming the champion of the cell phone and handsets with internet access. For example, the Chinese market for cell phones is showing an annual growth of 53%, going from 298 million units sold in 2005 to 457.6 million in 2006. The pharmaceutical industry is limited to fine chemistry and generics, and is unable to catch up with western countries. However, China’s capacity to catch up on its backlog in biotechnology (the Chinese market should reach US$ 9 billion in 2010) is illustrated by the fact that China has become the first country in the world to commercialize a gene therapy product: a gendicine for cancer treatment. (continued on p. 4)

BIOTECH FINANCES • 12 October 2009 • No. 434 Stem Cells Special

stem cells, taken from other sources such as the blood from the umbilical cord and the placenta. Stem cells taken from the umbilical cord allow the regeneration of the entire population of human blood cells.

(continued)

Panorama

The LIFTING of the BAN on EMBRYONIC STEM CELL RESEARCH by PRESIDENT OBAMA should INCREASE THE SECTOR’S DYNAMISM DOES FRANCE WANT TO BE A LEADER IN STEM CELL RESEARCH? At the moment France has a restrictive policy on the use of embryonic stem cells. Each individual has the right to his own morality and choices in society, such as being for or against embryonic stem cell research. It’s a personal choice in which the expert shouldn’t get involved. However, there is a certain hypocrisy in the law, because while the law makes it impossible to produce human embryos in France, they can be imported from abroad. The lack of competition in France is also reflected in the pharmaceutical field, which, on the face of it, is unaffected by the law. Looking at compounds in phase II at the end of 2008, we become aware of how far France is behind with just 66 compounds,

versus 180 in Great Britain and 137 in Germany, and not that far ahead of Italy, which has 45, and not forgetting the Scandinavian countries (Denmark, Finland and Sweden), which together have 97 compounds in phase II. Whatever the case, in a global economy French investors will always be able to invest in more permissive countries while preserving the intellectual and economic property of the research in question. It wouldn’t be so bad to have a lag in this technology, which will be difficult to catch up on, if only we could get the means to build competency pools in other areas, such as nanotechnology applications in life sciences or genetic science for example. It’s true that a restrictive regulation will increase France’s deficit in stem cell research, and inevitably specialized researchers and companies in the field will end up leaving the country. It is up to the politicians to decide. The real danger would be to see a restrictive policy on stem cells on the one hand, and an absence of strategic vision and incentive policies on the other that would allow France to take the lead in one or several areas of innovation in life sciences. It is important to become an economic leader (companies) rather than an academic leader (researchers). The restriction of researchers to public research structures doesn’t give enough opportunity to entrepreneurial talent, and this is the real reason for the differences between the development of young businesses in France compared to those in Great Britain, Germany or the Scandinavian countries. Apart from the ethical debate or the regulations, it’s also important today to take the competency level into account. France, as a country with restrictive regulations, is exporting its competency in stem cells. For example, Swiss biopharmaceutical laboratory Roche, which is located in a country with permissive P R E M I U M

regulations, has signed an agreement worth 16 M€ with French company i-Stem. This agreement will allow Roche to use i-Stem’s compound screening platform on human embryonic stem cells to discover new compounds for Alzheimer’s disease and schizophrenia (mid-2009). Through this partnering agreement Swiss researchers will benefit from a huge transfer of French competency. The stem cell market is fundamentally a market of the future. What we need is a clear policy on embryonic stem cells. The worst thing would be to adopt a non-attitude by trying to please those for and those against with a vague set of rules and with exceptions that soothe our consciences but that fail to give a clear signal to potential investors, who are already cautious in this field, and that also discourage researchers. If the restrictive policy on stem cells endures, what will happen to the new technology from stem cell research, which could result in treatment solutions for serious and currently incurable illnesses? Will they be authorized on French soil or will they be kept outside the borders? Will it mean that access to new treatments will be reserved to those who have the means to buy them abroad? We can’t get away from this debate today by legislating research and pretending the major advances resulting from this work aren’t happening. This question needs to be dealt with today. ❚ Prof. Mondher Toumi, President of Creativ-Ceutical, Professor at Lyon 1 University.

S U B S C R I P T I O N

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BIOTECH FINANCES • 12 October 2009 • No. 434 Stem Cells Special

Also noteworthy is the recent success of two Chinese teams of scientists in creating viable mice after transforming adult stem cells into embryonic cells. In the same vein, the first symposium in China on induced pluripotent stem cells was attended by no less than 300 Chinese researchers in 2008. China is determined to become one of the leading countries in stem cell research through a strong policy of public subsidies for the creation of biotechnology companies.

(continued)

PARLIAMENTARY DEBATE ON BIOTECHNOLOGY, ORGANIZED BY NIXON PEABODY AND BIOTECH FINANCES

FRANCE

Report on a successful premiere. Bio-entrepreneurs, members of parliament, investors and institutions have set out concrete ways for improved funding and better support for innovation in France in the health biotechnology sector. We’d like to thank all the contributors and participants. The event will have its second edition in October 2010.

Entrance to the Jacques Chaban-Delmas building.

Professor Pierre Louis Fagniez, advisor at Valérie Pécresse, Minister of Higher Education and Research

Juliette Lemaignen, deputy chief editor Biotech Finances

The debate chairman Professor Bernard Debré.

Left to right: Cécile Tharaud, José Sahel, Jean-Charles Pomerol, Jean Deregnaucourt, Juliette Lemaignen and Michael Cooney

José Sahel, scientific director of the Institut de la Vision.

Jean-Charles Pomerol, President of the University Pierre et Marie Curie, and Jean Deregnaucourt, Medicen Paris Region.

BIOTECH FINANCES • 12 October 2009 • No. 434 Stem Cells Special

Event

(continued)

Cécile Tharaud, President of the Board at Inserm-Transfert SA.

Left to right: André Choulika, Alain Clergeot, Catherine Borg-Capra, Emmanuelle Porte, Antoine Papiernik and Tristan Rousselle.

Alain Clergeot and Catherine Borg-Capra.

André Choulika

Catherine Borg-Capra, Emmanuelle Porte and Antoine Papiernik.

Christine Bagnaro, Invest France, Fabienne Fellah, UPMC and Jean-Pierre Loza, Biotech Finances.

Karen Aiach, San Filippo

Douglas Glucroft and Michael Cooney, associate attorneys at Nixon Peabody.

Emmanuelle Porte, Olivier de Chazeaux and Bernard Debré.

Bernard Gilly in the foreground

Juliette Lemaignen, deputy chief editor Biotech Finances, and Tim Haines, associate at Abingworth.

BIOTECH FINANCES • 12 October 2009 • No. 434 Stem Cells Special

Event

€deals Special

(continued)

Bernard Gilly, Fovea

Olivier de Chazeaux, associate attorney at Nixon Peabody.

Christian Lajoux sanofi-aventis

Photos : © Emmanuelle Avram, Nixon Peabody

Left to right: Hedi Ben Brahim, director of health products in the social security management team, Olivier de Chazeau , associate attorney at Nixon Peabody, Claude Allary, associate founder Bionest Partners and Jacques Biot, CEO at JNB Development.

Left to right : Laurent Arthaud, FSI, Christian Lajoux, Sanofi-Aventis, Juliette Lemaignen, deputy chief editor Biotech Finances, Tim Haines, associate at Abingworth, Bernard Gilly, Fovea, and François Maisonrouge, Evercore Partners. Jean Deregnaucourt, Medicen Paris Region

Emmanuelle Porte, associate attorney at Nixon Peabody, and Antoine Papiernik, sanofi-aventis. Breaktime networking.

BIOTECH FINANCES • 12 October 2009 • No. 434 Stem Cells Special

Laurent Arthaud, FSI, Christian Lajoux, Sanofi-Aventis, and Juliette Lemaignen, deputy chief editor Biotech Finances.

Markets

SUPPORT FOR CELL MEDICA EXTENDED WITH 2 M€ GREAT BRITAIN

Our PRODUCTS are TRANSPLANTS rather than DRUGS Several other private investors joined the round with 850,000 €. The existing syndicate, including the Wellcome trust and Imperial Innovations, had collected 2.75 M€ during a first round in 2007, when Cell Medica was founded. The new funds will be used to boost the commercialization of immunoprophylactic adoptive cellular therapy (IMPACT) for the treatment of cytomegalovirus (CMV) infections in immunosuppressed patients, particularly patients at high risk of CMV infection following a bone marrow transplant, which is a major cause of death. “There are many groups of researchers in Europe and the United States who are working on T cells, but we’re the only ones to offer a treatment”, explains Gregg Sando, CEO of Cell Medica. Due to receiving a transplant designation rather than a drug designation from the MHRA (1), the company was able to rapidly commercialize its treatment (2). So far some 40 patients have been

treated, and the trial is due to be carried out on 100 more patients by the end of 2010. During the next few months, the company will focus on three new infections, the Epstein-Barr virus (EBV), Aspergillus fumigatus and the adenovirus. Beyond this, the company will work on a high-output manufacturing system for cell therapy. With funding of more than 1 M€ almost half of the 2.16 M€ needed – through a subsidy from the Technology Strategy Board, this system should be completed by end 2011. IPO DUE WITHIN FIVE YEARS Before then Cell Medica needs another financing round of 8 to 10 M€, which is planned for mid 2011. This recapitalization could be dedicated to the opening of a branch in the United States, about which talks with some US academic institutions are in progress. A branch could also be opened in Germany. This subsidiary would probably be established through several academic alliances. Once this step is accomplished Cell Medica will need to replenish its cash again for continued growth, and flotation on the stock market is planned within five years, when the company has become well established on the market, and will give investors an opportunity to exit. “A trade sale is less likely”, continued Gregg Sando. “Generally speaking, pharma companies seem slow to move into the field of personalized cell therapy, which isn’t easy to produce

and to distribute on a large scale, but some are considering the possibility.” ❚ Anna Moreau amj@biotech-finances.com 1 – Medicines and Healthcare products Regulatory Agency 2 – Cell Medica is waiting for a response from the National Health Service regarding the reimbursement of the product. The outcome is expected early 2010.

CELL MEDICA NETWORK PARTNERS Banks Alliance & Leicester – London Barclays Bank - London Legal advisors, current affairs Mark Anderson – Oxford Legal advisors, intellectual property John Miles, Potter Clarkson – Nottingham Chartered accountant Susan Parker, SP2 – Guildford Academic partners University College London Imperial College London The University of Würzburg – Germany BUSINESS OPPORTUNITIES Expansion Cell Medica may open new branches in the US and Germany through academic partnerings. Recruitment The company wants to recruit junior and experienced researchers in the field of cell therapy.

WHAT THE ANALYSTS SAY

Maina Bhaman, investment manager at Imperial Innovations “Cell therapy, and T cell therapy in particular, has existed for more than 10 years, but apart from the products from Cell Medica, there is no immune therapy available on the market yet. So far, this type of therapy is only offered by hospitals themselves, so the company doesn’t really have a commercial competitor. Cell Medica’s activity consists of taking on secure programs and commercializing them, which reduces the development risk significantly and is attractive to investors. The technology they use is very profitable, because it is relatively late-stage, which enables a quick start of treatments, without the need for a lot of prior security work.”

BIOTECH FINANCES • 12 October 2009 • No. 434 Stem Cells Special

Amongst the few businesses involved in personalized cell therapy, the British company Cell Medica is playing its cards right by closing a financing round of 2.1 M€. The round was led by Imperial Innovations, contributing 1.25 M€.

Interview

STEM CELLS: THE ETHICAL, POLITICAL AND LEGISLATIVE CHALLENGES UNITED STATES

BIOTECH FINANCES: Is the existing patent system appropriate for the activity in the field of stem cells? David Resnik: Throughout the world, policies on patent systems need to be revised, particularly in the field of stem cells. We know some cases where clients have decided not to register a patent application because the sector evolves so quickly that research becomes obsolete very quickly, and it doesn’t seem to make sense to invest funds in this process. However, those that have decided to go ahead with patent applications now have a very soughtafter portfolio for acquisitions by the sector’s start-up companies. In my opinion it’s very important to register patent applications, because the aim is to achieve exclusivity and a return on investment. By building an IP portfolio you set out your specific territory, and prepare for making a profit on a product or a discovery. BIOTECH FINANCES: What are the major obstacles for stem cell research? How have they affected this front line sector? D. R.: The patent system in the United States and Europe has been developed over the last few centuries, mainly in

relation to chemical inventions. Unfortunately government offices are a few years behind on what’s going on in the world of science. They’re finding it hard to keep up, because new technology can be complex and sometimes, as in the case of stem cells, controversial. The debate that rages on about stem cells was triggered by the use of embryonic stem cells, which actually only represents part of the research in this field. Consequently, even if there is no embryonic fluid involved and there is no ethical concern, the patent instances can be reluctant or suspicious. Another aspect is that the stem cell sector is very young, having started in 1998 with the first patent registration in the US by WARF (Wisconsin Alumni Research Foundation). In the years that followed we saw huge patent claims, which ended up blocking teams that were trying to integrate the technology. The WARF patents were designed in such a way that the institute received exclusivity on all types of stem cells. These claims still exist, but they have been re-examined two years ago on request of the State of Califorina, who was financially heavily involved in stem cell research.

D. R.: The American system has been completely overwhelmed by the creation of break-away technology developed by companies such as Shinya Yamanaka, in Japan, named iPS (induced pluripotent stem cells), which makes it possible to turn adult stem cells, such as skin cells for example, into stem cells from which

BIOTECH FINANCES: What is the situation today in the US system, according to you? Have the problems been resolved to rationalize the patent system in the field of stem cells?

BIOTECH FINANCES: How do the patent systems in the United States and Europe compare?

The US PATENT SYSTEM, particularly for STEM CELLS, needs to be OVERHAULED any tissue or organ in the human body can be created. The patent office doesn’t know what to do with this technology, which should in fact have been covered by the WARF patents if these hadn’t been limited. So far, the office has adopted a wait-and-see attitude. This means that a new technology could be patented every two months, but nothing changes because of the lack of consensus. The problem for the regulatory offices lies in the difficulty in imagining the invention they’re authorizing with a patent - or not - five, ten or fifteen years into the future.

D. R.: In the United States, the patent institution isn’t up to date in the health sector. We’re hoping that the new (continued on p. 10)

BIOTECH FINANCES • 12 October 2009 • No. 434 Stem Cells Special

David Resnik, associate attorney at Nixon Peabody in Boston and intellectual property specialist in the complex and controversial sector of stem cells, gives his views to Biotech Finances on the challenges the sector is facing. After more than 10 years of activity, stem cell research is still a topic of debate, including the chaotic consequences of its beginnings in terms of intellectual property.

Obama administration will bring radical changes, because this situation is very harmful for the US life sciences industry. In Europe the institution seems to be working better. The patent examiners are more professional. With better salaries and benefits, they generally stay in their position for several years, accumulating

With OBAMA we’re HOPING for CHANGES in MANAGEMENT, REGULATION, and FINANCING an in-depth experience of the sector. In the United States, examiners rarely stay more than six months or a year in the same position. This doesn’t give them time to get to know the ropes and improve their work, which poses a real problem in patent offices. It is very important that this institution changes

(continued)

its dynamic by working with the health industry and by promoting long term training of their employees. In Europe, the examiner and the person who’s applying for a patent talk about what can and can’t be done, which really pays off. On the ethical level there were no particular problems until the Clinton and Bush administrations, which put restrictions in place on government subsidies for stem cell research. It became a political problem and the patent office, as a government organization, became very nervous in this field. In Europe, the law states that you can’t patent a part of the human body, which rules out the use and the patenting of an embryo. But every country has its own rules, and Great Britain for example is very permissive in terms of this type of patent.

in the number of patent applications in the next few months, because researchers have dedicated a lot of their time and energy to stem cells. But the question is how many of these patents will have commercial value? Another problem is government subsidies for research on these stem cells. After the Bush administration, which was very strict on stem cell research, we’re hoping to see, with Obama, changes in management, regulation, and financing (1). We had great expectations from this new administration in terms of changing every aspect related to stem cells, but the big changes haven’t happened yet and who knows if our hopes will be ❚ fulfilled?

BIOTECH FINANCES: Is there any prospect of improvement in the US system? How do you see the sector evolving in the future?

amj@biotech-finances.com

Interview taken by Anna Moreau

1 – Barack Obama has announced the lifting of the ban on financial funding for stem cell research in spring 2009.

D. R.: I’m expecting to see an explosion N E W S B I T E

Cellectis launches subsidiary dedicated to stem cells Cellectis S.A. (Alternext: ALCLS), a leading French genome engineering company, has announced the creation of Ectycell, a subsidiary dedicated to the biomedical uses of stem cells. The initial applications developed are tools for generating induced pluripotent stem cells from

adult cells; robust, reproducible differentiation of stem cells; and the constitution of cell libraries for testing drug candidates. "Cellectis' core technologies will have a major impact on the stem cell field", stated David Sourdive, CEO of Ectycell. "We are tackling important issues here, such as reducing the high attrition rate in drug development by using early-stage

assays that better predict a molecule's effect on the organism as a whole or on a genetically diverse population. We also may have the opportunity to open new paths for regenerative medicine - especially for pathologies such as Alzheimer's and Parkinson's diseases.” Among other projects, Ectycell will be supporting a platform for the production of induced stem cells. ❚

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BIOTECH FINANCES • 12 October 2009 • No. 434 Stem Cells Special

Interview

Strategy watch EUROPE – ISRAEL: DEALS FROM 1 TO 8 OCTOBER 2009

5 Mr Thierry Bogaert OGBBA van Herk BV Biovest Comm.VA 6 Sanofi-Aventis SA 7 YA Global Master SPV Ltd 8 9 10 11 12 Rumour date 6/10/2009 5/10/2009 9/10/2006 27/08/2009 1/10/2009 1/10/2009

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Bicycle Therapeutics Ltd Tubilux Pharma SpA's commercial assets mtm Laboratories AG

GB IT DE

Minority stake unknown % Acquisition 100% 39000,00 Minority stake unknown %

Completed Completed Completed

Venture capital Development capital - seed Development capital - 3rd round Private Equity

Cash

Optivite Ltd

3743,81

Completed

Capital increase - vendor placing

4110,02

BE NL BE FR

Devgen SA

14963,00 Minority stake 8.925%

Completed

Capital increase - private placing

Shares Cash Cash

Fovea Pharmaceuticals SA Pharming Group NV Kiotech International plc Sinclair Pharma plc

FR NL GB GB

100,00 5197,37 1419,39

Cash Cash Cash

75735,53 11392,03 36817,69

Allergy Therapeutics plc Hikma Pharmaceuticals plc LifeCycle Pharma A/S

GB GB DK

2187,44 Minority stake 5.558% 15425,49 Minority stake 1.552% Minority stake unknown %

Cash

110509,88 1111453,27

Date announced 6/10/2009 5/10/2009 9/10/2006 27/08/2009 1/10/2009 1/10/2009

Date completed 6/10/2009 5/10/2009 5/10/2009 1/10/2009 1/10/2009

BIOTECH FINANCES INDEX

Acquisition 100%

Acquisition 100% Minority stake 0.171% Minority stake 38.685% Minority stake 4.723%

Announced Completed Completed Completed Completed Completed Completed

Capital increase - private placing Capital increase - placing Capital increase - convertible loan notes Capital increase - private placing Capital increase - private placing Capital increase

Rumour date 15/04/2009 27/08/2009 7/09/2009 25/09/2009 1/10/2009 1/10/2009

7 8 9 10 11 12

Deal Deal Estimated Enterprise Enterprise values th EUR values th EUR

Cash

Date announced 15/04/2009 27/08/2009 5/10/2009 25/09/2009 1/10/2009 1/10/2009

155803,66

Date completed 5/10/2009 1/10/2009 5/10/2009 1/10/2009 2/10/2009 1/10/2009

BUZZ OF THE WEEK ON WWW.BIOTECH-FINANCES.COM source Médiamétrie estat

1. ..................................vexim fi 2...........fovea pharmaceuticals fi 3...............................mutabilis fi 4. ..................................diatos fi 5. ............................vitamfero fi

6. ........................kika medical › 7. ............................invitrogen › 8. ................................biogaia › 9. ..................................genfit › 10. ..................laurent ganem ﬁ

List of most frequently used key words in searches this week for articles on the Biotech Finances website / Source Médiamétrie

ORIGIN OF UNIQUE VISITORS OVER THE LAST 7 DAYS source Médiamétrie estat Biotech finances is the only index of biotechnology stocks registered in France. It was launched by “Editions Européennes de l’Innovation”, publishers of Biotech Finances, the premier newsletter about the bio-economy in Europe: www.biotech-finances.com

BIOTECH FINANCES IN ENGLISH BIOTECH FINANCES REACHES OUT TO THE WORLD As many of you are aware, since January 2009 the weekly newsletter Biotech Finances has been PUBLISHED IN ENGLISH. We continue to build on our 10 years’ experience as the leading French publication in the sector as we reach out to a much larger readership, increasing our exposure significantly. In just a few weeks, the percentage of unique visitors to our website from the US has increased six-fold! BY SUBSCRIBING TO BIOTECH FINANCES, you will receive independent, pertinent, and high quality information on your preferred sector, AND ALSO you will become part of our mission to give biotech companies far and wide inspiration and improved performance. Biotech Finances is a weekly publication of Editions Européennes de l’Innovation • Director and Editor in Chief: Jacques-Bernard Taste • E-mail : jbtaste@biotechfinances.com • Deputy Editor in Chief: Juliette Lemaignen • English Office: Wina Gunn wgunn@biotech-finances.com and Steve Gunn sgunn@biotech-finances.com • Design: www.anfetamine.fr • Publication company: Editions Européennes de l’Innovation, au capital de 8,000 €• Head Office: 72 boulevard des Brotteaux - 69006 Lyon - France • Tel. : +33 (0)478 24 35 20 • Fax: +33 (0)478 24 35 20 • Incorporated in Lyon: 480 764 398 • Commission paritaire: 0606 I 79205 • ISSN: 1298-9428 • Issue Price: 37 € • Annual subscription price / 44 issues : 1 170 € • Website: http://www.biotech-finances.com • For sales and subscriptions, call: +33 (0)478 24 35 20 • Printers: Dupli-Print - 2, rue Descartes - 95330 Domont

BIOTECH FINANCES • 12 October 2009 • No. 434 Stem Cells Special

1 Atlas Venture UK Ltd Novartis Venture Fund" 2 Bausch & Lomb Inc. 3 Heidelberg Innovation GmbH Wellington Partners Venture Capital GmbH Swissfirst Bank AG HBM BioVentures AG Mannheim LLC HBM Partners AG Gilde Healthcare Partners BV Nexus Medical Partners National Technology Enterprises Company LBBW Venture Capital GmbH" 4 Kiotech International plc

Légende * = valeur estimée

Une exclusivité Biotech Finances / Zephyr - Bureau Van Dijk Editions Electroniques

Acquiror name