Astex to raise over £20 million
Cambridge based cancer therapy developer Astex Therapeutics is bidding to raise between £20m and £25m in venture capital funding rather than pursue a stockmarket float in the short term.
The company’s new chief executive, Leon Bushara, told Business Weekly that a successful private funding round on top of the company’s existing cash strength and allied to some impressive revenue-earning capacity meant Astex had no need to dive into an IPO.
It will only float if market conditions become prime but Bushara says loyal investors have sufficient faith in the business and its refocused strategy not to exert any pressure on the board for a panic float.
Bushara revealed a robust product development programme that adds further considerable ballast to the business and says Astex is creating so many potentially lucrative partnership options that it has no need to go seeking a merger with external ‘big brothers.’
“Right now, we feel we have the ammunition to pursue our highly focused strategy independently; consolidations have been fashionable in the sector but a trade sale certainly isn’t on our agenda.”
Bushara says Astex is under absolutely no pressure to divert from is strategy. Astex is believed to have already secured alliances with Big Pharma potentially worth £525m.
The company’s lead collaboration is with Novartis; a £283m deal was struck last December for rights over two Astex cancer-drug candidates in early stage trials.
AstraZeneca, which has just acquired Cambridge Antibody Technology, is another key partner. The companies are developing anti-cancer agents that could generate £150m in milestone payments for Astex. The company also has important alliances with Schering and Boehringer Ingelheim.
Uncommonly at this high plateau of biotech, Astex’ burn rate is comfortably exceeded by its cash and revenue-earning capabilities so the proceeds of the upcoming fundraising can directly underpin product development.
Bushara said: “We are in a very strong position. While the timetable for trials is inevitably unpredictable, it would be reasonable to say that initial trials of our leading product will be completed by the end of this year and of our second most advanced product by the end of next year.
“Our strategy is to have the data on our products to excite the market and by mid-2008 we should have demonstrated the efficacy of our lead products in patients. That may well be the optimum time for Astex to consider a float if all the other conditions are right.
“We don’t feel under pressure to put a specific timescale on that. We are a company that likes to keep froth to a minimum and are also a lean company. The lead time associated with an IPO and the costs – direct and indirect – can be a distraction and you can take your eye off the ball.
“As we are blessed with patient and loyal investors happy with our focus we feel extremely comfortable with our stance.”
Astex, which employs around 100 people, doesn’t expect any significant increase in headcount but Bushara said the company was actively recruiting key people who could take the business on. He also stressed that the development effort would not be strengthened at the expense of research but an effective balance maintained.
The City expects Novartis and existing VC backers to provide at least half the new funds Astex is raising – and that kind of support couldn’t necessarily have been guaranteed from an IPO in a fickle marketplace.