Toronto-based Arius scores big (and a win for investors)
I lucked out last week: I happened to be sitting next to David Young during a pharmaceutical industry business function. David is a Founder and CEO of Arius Research (Now acquired by Roche)..
This company is a complete success story on the relatively gloomy Ontario biotechnology landscape. It is also an example of a biotech company that succeeded by staying close to its scientific roots and diligently perfecting its productive technology platform.
Here is a mini-dossier:
Arius was founded in 1999 to discover new therapeutics using a unique, proprietary technology platform that generates and selects therapeutic antibodies based on their activity. This antibody generation engine has enabled Arius to develop a pipeline of more than 400 antibody drug candidates.
During its nine-year history, Arius has raised about $30MM in investment capital. It was also on the brink of going under just two years ago when a financial investor pulled out of the transaction at the last minute. As a commentary on corporate culture, during those difficult six months all employees agreed to take only half salary to see the company through the financing bump.
Arius was acquired by Roche on September 24 for $191MM in an all-cash transaction. Roche paid a 44% premium to the 20-day volume-weighted average closing price up to the last trading day prior to ARIUS’ announcement that third parties have shown interest in the company and its technologies. Investors who put money into ARI two years ago made a very nice ~6X return.
For a company with an interesting pipeline of preclinical candidates this is a strategic triumph. As David Young said, “Roche’s capabilities in biopharmaceutical research, development, manufacturing and commercialization offer us the ideal opportunity to realize the full potential of our approach and pipeline of candidate drugs.”
Most importantly, the transaction separates Arius from a whole generation of cash-starved companies that lack the funds necessary to push their development candidates through to value inflection points. According to recent data compiled by Rodman & Renshaw, over 80 public biotechs trade with less than one year of cash, and over one third of these are trading at valuations less than their existing cash reserves. While there are many creative financing structures available to companies with later-stage development candidates or marketed products, present day financing options are fairly limited for a platform play like Arius.
Through the acquisition, Roche gains access to the platform as well as to three lead programs, including antibodies directed to a cancer stem cell target (and a collaboration with Dr. John Dick, a pioneer in the cancer stem cell field).
Many feel that 2009 is a “do or die” year for the industry in Ontario. Arius gave a truly inspiring gift to the community. Thanks, David, for sharing your story!
Veronika Litinski provides advisory services to entrepreneurs and high growth companies, with a special focus on life sciences markets, specializing in corporate finance and business development. See more…