Phillip PE sees 7x return on biotech start-up

Even as a joint proposition, the scaled up company was hardly what global drug developers' dreams are made of. 

"It was not something very new," says Alex Koo, director of Singapore-based Phillip Private Equity, referring to DENVax, the dengue fever vaccine. "It was developed in Singapore in the 1970s by the government but there was never much interest from big pharma because dengue fever is known as a developing country disease so the project was frozen."

Nevertheless, Phillip agreed to back the combined company in early 2009 because it knew something of the project's history. Inviragen's founder located the research in the archives of the Centers for Disease Control & Prevention, the US national public health institute. The strain upon which DENVax was based had been tested on the Thai army before development efforts lapsed, so there was sufficient data to suggest the vaccine would work.

Bio*One Capital, part of EDBI, was the largest shareholder, followed by a Phillip-run venture fund with 21%. The numbers were made up by two US players, Charter Life Sciences and Venture Investors. They committed $27 million to Inviragen across two funding rounds.

Takeda Pharmaceutical of Japan last week agreed to pay $250 million for the company - $35 million up front and the rest once certain clinical development targets are reached - promising a money multiple of up to 7.5x.

Phase 2 clinical trials of DENVax are approaching completion while an HFMD vaccine has gone through Phase 1 testing. Based on Phase 3 investment in a dengue vaccine by Sanofi-Aventis, Takeda is expected to commit around $500 million to Inviragen. It is part of a wider effort to address a mosquito-borne viral illness that affects 400 million people each year, of which around 500,000 are hospitalized and 20,000 die, most of them children.

For Phillip's Koo, the investment was as much about the high chance of success as the clear demand for a dengue drug. Once the results of Phase 1 testing emerged and it became clear the vaccine worked, Inviragen's backers were confident a large buyer would come in for it. He also puts the relatively small amount of capital committed over a four-year period down to careful cost management.

"I don't think you would have this with big pharma where there are large overheads," Koo adds. "When people talk about biotech they think it's high risk but once you understand the process then risk can be managed."

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• Topics
• Healthcare
• Venture
• Southeast Asia
• Singapore
• healthcare
• Pharmaceuticals
• Joint Venture