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US investors help German unicorn score $270 million

Deutschland. Mainz. BioNtech. Forschungslabor. 29.2.2016. Photo: Bernd Roselieb
There's money somewhere in here. Source: Bernd Roselieb for Handelsblatt

Unicorns, startup companies valued at more than $1 billion, are rare, but even more elusive are German biotech unicorns. Mainz-based Biontech is developing customized vaccines that rev up patients’ immune systems to fight cancer, and it’s valued at €2 billion to €2.5 billion after closing a Series A financing round of $270 million (€225 million), with much help from US investors.

The early-stage round, the largest by a German biotech firm and one of the largest in Europe, was led by the Redmile Group, a US financial investor. It elevates the company to the level of listed German biotech firms such as Qiagen, Morphosys and Evotec.

Securing the attention of US investors like Redmile, Janus Henderson, Invus and Fidelity is crucial to help Biontech reach the stock market. So far, the company, with 700 employees, is the largest unlisted biotech firm in Europe. But going public is only half the battle: The company, which sees an IPO on the horizon perhaps for 2020, must still prove its therapies in clinical studies and will burn through a lot of capital in the process.

Biontech’s cancer vaccines have already delivered promising results in patients with melanoma, a type of skin cancer. The company’s vaccines, work with RNA molecules to trigger an immune response from the patients’ own body and keep the metastases from returning. CEO Ugur Sahin thinks “it might be possible to put the patient’s own immune system in a position to fight a wide variety of cancers.”

Normally, RNA molecules bring information within cells from DNA to the little cellular machines called ribosomes, telling them what kinds of proteins to make. For Biontech’s vaccines, RNA molecules are modified to no longer produce normal proteins, but instead produce a specific antigen, or threat, that triggers the body’s defense system to attack. Should the threat appear again, the body can recognize it and send out warrior cells to fight. This is known as an immune response and the basis of Biontech’s work.

However, most of Biontech’s therapies are in early stages of clinical research, meaning there is no guarantee they will actually work. Only four products are currently being tested on patients and another two should be added by the end of 2018, says Sean Marett, Biontech’s COO.

“It might be possible to put the patient’s own immune system in a position to fight a wide variety of cancers.”

Ugur Sahin, Biontech CEO

Other companies, like CureVac and the US company Moderna, are also focused on RNA vaccine research, and support from US investors signals to Biontech’s rivals that they too are highly ambitious. “We see ourselves as being in a leading scientific position, and want to move forward at least as fast as the Americans,” Mr. Marett says.

Biontech’s alliances with major pharmaceutical companies, including a deal with Roche subsidiary Genentech, a market leader in oncology, suggests that the company is on to something. Together, the two companies want to further developing custom-made cancer vaccines that are adapted to each specific type of tumor.

Biontech is also working together with Eli Lilly and Sanofi, Bayer and Danish biotech Genmab. Advance payments from these partnerships, in addition to the impressive financing round, mean the company’s liquid reserves are now around €479 million, said Helmut Jeggle, chairman of the supervisory board of the Strüngmann Family Office, which invested $60 million in company. This puts the firm in a leading position in Germany’s biotech sector, he said.

But funds go fast. Biontech already invested €50 million to build a second semi-automated production facility that would treat about a thousand patients in upcoming clinical trials. And another nearly fully automated production facility capable of treating several thousand patients is being planned in cooperation with Germany’s automation giant Siemens.

This facility could cost up to €200 million but would treat patients with personalized therapies in a cost-effective way. “These are paths no one has ever gone down before,” Mr. Jeggle says, who insists it is necessary if the company wants to disrupt the market. It’s as if the biotech and its investors agree with Robert Frost: Take the road less traveled.

Siegfried Hofmann writes about companies and markets for Handelsblatt. To contact the author: hofmann@handelsblatt.com

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