BioWorld International Correspondent
For German biotechnology, 2003 was both good and bad.
It was a good year for companies with significant capital on hand and for acquisitions. However, it was a bad year for initial public offerings (of which there were none) the Neuer Markt closed in February and the German government's push for global restrictions on cloning was met with a delay, as the United Nations decided to postpone any decision for at least two years.
Despite concerns at the beginning of the year that venture capitalists would keep their checkbooks closed, 2003 brought substantial funding to biotech companies in Germany and Austria. Firms in those countries raised more than €175 million from venture capitalists.
Intercell AG, of Vienna, Austria, closed a €30 million deal in July and a $20 million deal in November. Those investments brought the company's total capital raised to more than $100 million.
"I think it is absolutely critical to step up to public markets at some point in time, and we will try to do so," Intercell's CFO Werner Lernthaler told BioWorld International in November. "This financing will not prevent us from doing that." The company said in July that the €30 million round would meet its operating needs at least through 2005.
Another Austrian company, Igeneon AG, of Vienna, has made no secret about its designs for an IPO. It has raised €45 million in total investment, €30 million of which came in 2001. In July, Igeneon's founder and CEO, Hans Loibner, told BioWorld International that Igeneon had been scrutinizing the IPO window and looking for an advantageous opportunity. "We are one of the companies who, in principle, would be able to [prepare for a public offering] in a short period of time," he said.
Four other investments topped €20 million each. Cellzome AG, of Heidelberg, Germany, raised €30 million in March in its third round of financing. Epigenomics AG, of Berlin, raised €21 million in April in its third round. Therascope AG, also of Heidelberg, raised €24.1 million in July in its second round. Ribopharma AG, of Kulmbach, Germany, raised €21.5 million as part of its merger in July with Alnylam Pharmaceuticals Inc., of Cambridge, Mass.
Seed companies found a new source of potential investors in 2003. In April, EMBL Venture Capital Partners GmbH, of Heidelberg, closed its second round of fundraising, gathering about €25 million from investors across Europe.
"We had a positive surprise with this round," Edeltraut Guenterberg, one of three investment specialists with the company, told BioWorld International at the time. The firm had set a €17 million goal for the closing, and "we are very happy that we were able to raise so much," said Guenterberg. The partnership has been associated with the European Molecular Biology Laboratory (EMBL), also based in Heidelberg, since December 2001.
Government backing continued to play an important role for the German biotech sector, and public programs initiated or expanded in 2003 mean that role will not diminish in the near term. In January, the German Ministry of Science and Education (BMBF) announced investments of €50 million to promote research in systems biology, which the ministry defined as an interdisciplinary combination of biology, mathematics, systems theory and information theory. The BMBF in October pledged about €100 million in funds to support all facets of German biotechnology over the next three to four years. Publicly funded programs will range from research money for individual investigators or research groups to bridge financing for small and medium-sized companies.
The German government also will be active as a venture financier. In the fall, Economic Minister Wolfgang Clement announced an "umbrella fund," with capital of up to €500 million, that will invest in high-technology fields, including biotech. Peter Ziegler, a spokesman at the BMBF, told BioWorld International in October: "The problem is that the banks have been relatively reluctant to finance new companies. The umbrella fund is meant to bridge this gap." The fund will eventually include private investment and is projected to reach €1.7 billion.
The government has not met with success regarding its signature initiative in international agreements related to biotechnology. It backed a global ban on both reproductive and therapeutic human cloning, pursuing a binding convention through the United Nations. The key point of contention in negotiations emerged as the definition of therapeutic cloning. Biotechnology researchers who have no intention of implanting cloned embryos and who would be working with very small numbers of cells might still fall afoul of the planned convention. Discussions deadlocked on those and related questions in both 2002 and 2003, and the German government was forced to acknowledge that its drive was not succeeding. The negotiating group at the UN decided to postpone any convention until at least 2005.