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November 3, 2011
Verastem Goes Public: Why Not?
Posted by Derek
Doesn't this seem just a bit. . .early. . .for an IPO? In this climate?
Chris Westphal, a founder of Sirtris and a fixture of Cambridge/Boston biotech startup culture, helped to launch a company called Verastem in the middle of 2010. They're concentrating on the role of stem cells in cancer, a very interesting field (and one that a lot of other oncology players are interested in as well). And rather to everyone's surprise, they've now announced that they're going public. No, there's no compound, nothing heading for the clinic in the foreseeable future. They're just going public, presumably because the equity markets are in such a placid, welcoming mood or something.
Their plan seems to be to develop assays based on stable populations of cancer stem cells, and then to find compounds that selectively target them and develop these into drug candidates. Each step of that process is very much an open question, and is most definitely not trivial. It's a very worthy area of research, don't get me wrong - but it does seem odd to be going public at this stage with it, when there's so little for potential investors to evaluate. And it's worth noting that Verastem raised $32 million in financing just back in July. Are they already plowing through that? The IPO looks to raise about another $50 million - is that a sum that just couldn't be brought in via private investors?
Those are other questions will get aired out extensively in the weeks to come. We'll see how smoothly this all goes - and a lot of other small companies will be watching as well. One first reaction hasn't been too favorable: over on Twitter, biotech watcher Adam Feuerstein says "Christoph Westphal is why the clubby, VC-back scratching world of private biotech is derided by public investors". They'll soon get their chance to deride in person!
Comments (21)
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1. Hap on November 3, 2011 12:06 PM writes...
Maybe he believes that the world is ending in 2012 and so he wants to get paid now. Another option would be that his company has found a gene for stupidity in cancer cells and it's hoping that the gene is really as common as its tests say it is. A third possibility is that big pharma didn't want to take another (almost) billion-dollar ride, and so funding isn't as easy as hoped. I'm sure there are less cynical options, as well.
Permalink to Comment2. Chat on November 3, 2011 12:33 PM writes...
... so little for potential investors to evaluate
"Investors" are still evaluating ISIS, and now ALNY. And countless others (eg. GERN)
We should audit the Federal Reserve to find out where all these so-called investors are coming from.
Permalink to Comment3. PharmaHeretic on November 3, 2011 12:51 PM writes...
Question: What is the difference between a snake-oil salesman and serial biotech entrepreneur?
Answer: A snake-oil salesman is much more honest than the serial biotech entrepreneur.
Permalink to Comment4. bbooooooya on November 3, 2011 12:54 PM writes...
Is it too early to short this?
Great S-1, which will almost certainly be pulled within a year, though.
R&D spend for 2011 looking to be just shy of $2.75 million, compared to only $1.2 million to compensate the executive team. Sounds like they have their priorities about right......
Permalink to Comment5. Anomymous on November 3, 2011 1:01 PM writes...
This reads more as a way to establish a market cap for Verastem prior to a sale to big pharma than an effort to raise capital.
Permalink to Comment6. MoMo on November 3, 2011 1:45 PM writes...
Ye Gods Derek! Will this signal a return to the days when tool box companies run amok with my Grandma's retirement investments?
Stable stem cell lines? Is that even possible or is it an oxymoron?
These beasts need darted and tracked as invasive species as they squeezing other habitats and ecosystems in Pharma territory.
I would do it but I am still recovering after being mauled by my last tagged Pharma Bear.
Permalink to Comment7. marcello on November 3, 2011 2:01 PM writes...
It's very hard to get VC money nowadays, so some companies are trying to go for a "cheap" IPO. Atossa Genetics tried that (15 milski) last year but no news so far...
Permalink to Comment8. Anonymous on November 3, 2011 2:42 PM writes...
Underwritten by the Kardashians, no doubt.
Permalink to Comment9. Innovorich on November 3, 2011 2:44 PM writes...
Maybe this adds to the mix of this story - well extension of the Westphal/Sirtris story:
http://www.cell.com/cell-metabolism/fulltext/S1550-4131(11)00386-X
Permalink to Comment10. anonymous on November 3, 2011 6:22 PM writes...
What's the matter CW???? Didn't make enough $$$ last time?????????????
Permalink to Comment11. anonymous on November 3, 2011 6:25 PM writes...
@9. Innovorich
Permalink to CommentI suspect cyanide at low enough doses would do much the same, no???
12. coprolite on November 3, 2011 6:47 PM writes...
I emailed Derek a question last week about some former Sirtris folks, I'm starting to get the impression that if you lay with dogs you get fleas. Or at least smell like dog food.
Permalink to Comment13. petros on November 4, 2011 7:23 AM writes...
And he, along with Michelle Dipp, has also set up OvaScience
Permalink to Comment14. watcher on November 4, 2011 7:28 AM writes...
As long as Westphall, Dipp et al can convince potential investors that they can make money in a relatively short term "flip" of the asset by being acquired by BIG PHARMA or some other set of financial backers, he will continue in approach toward "buidling drug companies of the future".
People try to make the case that this approach makes jobs, contributes to the growth of biotech and future potential of new drugs. Bah, humbug. When money is drawn to such schemes, it typically somes from somewhere else where it can be better spent. And so far, Westphall backed ventures have certainly made money for early VCs and investors, but has also cost many others income, jobs, careers --- many who were let go from GSK to help pay for that fiasco take-over will never recover. And, WHERE ARE THE DRUGS?
Permalink to Comment15. SP on November 4, 2011 8:56 AM writes...
Their current compound is salinomycin.
Permalink to Comment16. bbooooooya on November 4, 2011 9:14 AM writes...
http://www.youtube.com/watch?v=4-jsqZQ4OOY
Permalink to Comment17. Anonymous on November 4, 2011 10:44 AM writes...
It worked for Sirtris...
Permalink to Comment18. Anonymous on November 4, 2011 10:56 AM writes...
It worked for Sirtris...
Permalink to Comment19. annony on November 4, 2011 10:58 AM writes...
What's the deal with Westphal? It was announced earlier in the year that he was leaving GSK, leaving his position at SR-One. But, he is still shown as the President of SR-One on their web newly, nicely reviced web-site.
Is he still double dipping, having undue official conflicting employment interests in an approach toward "creating value by having toes in positions with self-serving objectives? Will this mean GSK will invest in this new venture through SR-One, adding to GSK's love affair with Westphal's approach...Sirtis, Concert, et.
What a slime ball.
Permalink to Comment20. stuff on November 4, 2011 11:13 AM writes...
Way too early.
Lots of development stage companies IPO's to AIM in the UK during the early 00's. Did not end well.
Ended up with having to continually issue more shares to get more cash. Investors turned away from biotech.
Permalink to Comment21. Fred on November 6, 2011 8:38 AM writes...
I'm old-- I read it first as "Versaterm".
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