DUBLIN – European biopharmas have made a sleepy start to the new year, but with spring on the way, two transactions unveiled Friday could be harbingers of more activity to come. The scale is modest. Shield Therapeutics Ltd. took in £32.5 million (US$47 million) in an institutional share placing that accompanies its admission to the Alternative Investment Market of the London Stock Exchange. A warrant offering could add another £17.5 million. Karo Bio AB, meanwhile, will gross SEK250 million (US$29.6 million) in a discounted share offering on the Nasdaq OMX Nordic market in Stockholm, with potentially SEK30 million more to come if an overallotment option is exercised.

Both companies are at the low-risk end of the spectrum. London-based Shield has raised the cash to fund the European rollout of Ferracru (ferric maltol), a ferric-iron-based (Fe³⁺) oral drug for treating anemia in patients who cannot tolerate oral ferrous-iron-based (Fe²⁺) products – primarily patients with inflammatory bowel disease. Formal European approval is imminent, as the product received a positive opinion from the Committee on Human Medicinal Products in December.

Karo Bio, of Huddinge, Sweden, is best known for drugging nuclear receptors, and has, at various times, secured deals with many top 10 big pharma companies. Almost two decades of effort have yielded a lot of compound attrition and little in the way of success, although an autoimmune disease program targeting RAR-related orphan receptor gamma (RORγ), licensed to New York-based Pfizer Inc., remains active and has about $200 million in attached milestones.

The company has of late embarked on a parallel strategy of building up a cash-generating, diversified health care business in Scandinavia through M&A, a move precipitated by the return to the company of Anders Lönner. A former CEO of Karo Bio, Lönner is now its executive chairman, but he spent most of the last 15 years building up the Solna-based generics drugmaker Meda AB into a major international force, culminating in its recent $9.9 billion sale to Hertfordshire, U.K.-based Mylan N.V. Lönner is personally underwriting more than 97 percent of the Karo Bio share offering, which is fully guaranteed. It comprises 12.48 million new shares, priced at SEK20 each.

The stock had closed Thursday at SEK29.30, immediately before the transaction was disclosed, and it closed Friday at SEK24.60, down 16 percent. Existing shareholders are entitled to subscribe for one new share for every four existing shares they currently hold. The subscription period runs from March 29 through April 12.

Shield sharply reined in its ambitions, having originally sought £110 million in an IPO on the LSE's main market last September.

"We got caught by the Valeant pricing and the Turing pricing political storm," CEO and co-founder Carl Sterritt told BioWorld Today. It pulled the plug a month later and immediately embarked on finding an alternative route to market, albeit in difficult circumstances.

"The market conditions have been atrocious since Jan. 1," Sterritt said.

The company is issuing 21,666,662 new shares, priced at £1.50 per share. In addition, participants will receive warrants entitling them to purchase additional shares (in a 7:13 ratio) at the placing price, up to June 30, 2017. The company's shares are due to begin trading on AIM on Feb. 26 under the ticker symbol STX. The warrants will also be tradable, under the symbol STXW. At the admission price, Shield will be valued at about £162 million.

It now has enough cash to fund a European rollout of Ferracru and to fund a pivotal U.S. phase III trial of the same product in chronic kidney disease (CKD) patients with iron-deficiency anemia. Shield aims to file a new drug application around late 2017 or early 2018, and to seek a label extension in Europe. "As we stand now, we plan to commercialize it in the U.S. ourselves," Sterritt said.

It has parked plans to conduct a phase III trial of a second product, a phosphate binder called PT20, in CKD patients with hyperphosphatemia or elevated blood phosphate levels, and will instead seek a partnering deal. "A big portion of our original raise was a large phase III study of PT20," Sterritt said.

The company is currently building up a European sales force for Ferracru, with plans to launch in the U.K. and Germany initially, where the reimbursement process can be less cumbersome than in other large European markets, such as France or Italy. In terms of pricing, the company is benchmarking itself against existing intravenous iron products, which carry far higher costs in terms of administration. "It's a replacement for or an alternative to intravenous iron," Sterritt said.

A phase IIIb trial that pitches Ferracru against a well-known IV formulation, Ferinject (ferric carboxymaltose), is currently recruiting patients. A successful outcome could help persuade doubters that an oral product can perform as well as an intravenous one, without the attendant overheads and risks. A read-out could come early next year, Sterritt said. Ferracru, unlike oral ferrous products, is absorbed across the gastrointestinal wall while remaining complexed with maltol, a GRAS-designated substance.

Ferrous products, in contrast, can give rise to free iron that undergoes oxidation in the gastro-intestinal tract, giving rise to damaging reactive oxygen species. Shield is forecasting peak global sales in all indications of £500 million.