BIO Investor Forum, Sirius Genomics’ CDx to Help Xigris

While at the BIO Investor Forum meeting in SF, I took a moment to see a presentation given by Chris Wagner, President and CEO of Sirius Genomics, Inc.  The company is a diagnostics firm in Vancouver, BC, Canada.

The firm focuses on personalized medicine by developing a companion diagnostic for criticalcare medicine.  The company is developing a diagnostic product that is designed to select the most suitable patients suffering sepsis who would benefit from using a drug made by Eli Lilly called Xigris.

The drug consists of activated protein-c and generates about $200mm per year for Lilly.  Wagner believes that their Sirius personalized diagnostic could help Xigris  generate about $600mm per year.  To get started on its plans, the Sirius Genomics partnered with a speciality pharma company that expects to buy Xigris from Lilly.

Sirius Genomics would use a different kind of business model monetize its companion diagnostic. In this partnering deal, Serius Genomics would receive a percentage share of the drug’s gross sales. Based on his business analysis and forecast, Wagner believes that the company would generate about $100mm per year within five-years.  The company believes that this business model is better than doing ‘value’-based pricing that other diagnostics companies have been doing.

Wagner said that they would use drug industry rigor applied to diagnostics development.  He believes that to be successful, they need to go through the FDA and get an approval for their diagnostic.  Wagner estimated that in 20 years, most drug products will use some kind of personalized (companion) diagnostics.

Each year, nearly 1 million patients in North America and Europe suffer from sepsis.  Sepsis develops when an uncontrolled infection raises the the body’s three defense processes of inflammation, immunity and coagulation.  An overly aggressive defense response can cause multiple organ failure and death. Xigris and Vasopresson are two drugs that can treat sepsis.  Sirius Genomics uses SNP profles that identifies 40% of the population that can get a 2X efficacy for Xigris.  Wagner said that their approach could potentially boost sales of Xigris by 3X.

2010 BIO Investor Forum in San Francisco

On October 5th and 6th 2010, the BIO Investor Forum was held in San Francisco at the Palace Hotel.  There were around 700 attendees at this year’s event with over 140 companies presenting and more than 2000 one-on-one partnering meetings.

On day one, the topic of the opening plenary luncheon on Tuesday was “A Look Back at 2010: State of the Industry & the Art of Deal Making.”   John Craighead, Managing Director, Investor Relations & Business Development at BIO, began the presentation with an overview of the “State of the Industry.”  He said that there are 150 fewer biotech companies and 131 companies only have a year of cash left.  Biotech’s are closing fewer deals. There has been a lack of public IPO’s and a shift to deals instead.  He also said that it is an extremely competitive landscape right now.

Craighead closed his presentation with some take home messages.  He said there are 25 percent fewer U.S. public companies since three years ago.  However, the remaining companies have more cash and are stronger.  Finally, the 2010 IPO window is uncertain.

Following Craighead’s presentation, “The Art of Deal Making,” panelists discussed details of Celgene’s acquisition of Gloucester Pharmaceuticals.  George Golumbeski, Sr. VP of Business Development at Celgene said this would be the first in a series of acquisitions for the company.  Celgene’s deal with Gloucester included $340 million cash up front and $300 million in future regulatory milestone payments.  The main reason behind the acquisition of Gloucester was its only product, ISTODAX (a treatment for both cutaneous T-cell lymphoma and peripheral T-cell lymphoma), which received FDA approval in November 2009.

BIO Investor Forum, Day 2, “Alternative Financing”

On day two, the BIO Investor Forum business roundtable discussed, “Alternative Financing: Got Cash? Building the Balance Sheet through Innovative Financing Options.”

Moderator Jon McGarity, Executive VP at Campbell Alliance said that because money is hard to get, a number of small and mid-stage biotech companies are turning to alternative financing such as ATMs (At-the-market offerings) and PIPEs (Private Investment in Public Equity) among others.

According to panelist Brian Culley, CEO at Adventrx, the company almost went out of business, but managed to get money at the last minute through alternative financing.

Panelist Michael Margolis, Managing Director at Healthcare Investment Banking, when asked by McGarity if there has been an increase in alternative financing, Margolis responded that he has seen subtle changes.

Panelist Evan Myrianthopoulos, Sr. VP & CFO at Soligenix, Inc., said that the company has survived through PIPEs over the years.  He also said that it is good to have existing investors as well with alternative funding.

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