Adnexus Is Not Going Public

Last month, cancer drug company Adnexus Therapeutics raised VC funding and filed for an IPO on subsequent weeks. I wrote the following:

“Call me cynical, but I’m not so sure Adnexus is itching to go public. Instead, it seems like a company positioning itself to be acquired.”

Being right feels so much better than the alternative. Bristol-Myers Squibb announced this morning that it’s buying Adnexus for $430 million, plus the possibility of an additional $75 million in earn-outs. The deal makes sense for both parties, and represents a strong exit for the Adnexus VCs like Atlas Venture, Flagship Ventures, HBM BioVentures, Polaris Venture Partners and Venrock.

Here is the entirety of my post last month:

Last week, cancer drug company Adnexus Therapeutics was announcing that it had raised $15.5 million in Series C funding. Today it’s filing for an $86.25 million IPO.

Call me cynical, but I’m not so sure Adnexus is itching to go public. Instead, it seems like a company positioning itself to be acquired.

Waltham, Mass.-based Adnexus has developed a new class of therapeutic proteins called Adnectins, which it generates from human fibronectin by applying a proprietary protein engineering system. The idea is to then discover antibodies and other drugs via this process.

The problem, from a public offering standpoint, is that Adnexus doesn’t have much to offer public shareholders beyond future hope – which is what has gotten scores of other VC-backed biopharma offerings into trouble. Its lead candidate is not expected to enter Phase 2 clinical trials until Q1 2008, with everything else still in discovery or post-discovery (including a few candidates owned by Bristol-Myers Squibb). The BSM deal could be worth up to $1.3 billion – and does include some guaranteed annual payments of $30 million – but that horizon may be too distant for certain hedge funds and a variety of other institutional buyers. Moreover, it means that Adnexus has plenty of capital without the IPO.

All of this brings us back to a possible acquisition. Strategic buyers have expressed recent hunger for VC-backed pharma companies, and for VC-backed antibody companies in particular. For example, Esai Co. earlier this year agreed to buy Morphotek for up to $350 million, while GlaxoSmithKline shelled out ₤230 million for Domantis Ltd.

None of this is to say that Adnexus won’t – or can’t – go public. Just to say that such a move looks like Plan B.