Deal in Focus: Forbion et al. sell Rigontec to MSD for up to €464m

A consortium of investors has sold biotechnology company Rigontec to US pharmaceutical company MSD for an initial purchase price of €115m. MSD may make additional payments of up to €349m, equating to a maximum transaction value of €464m.

The vendors include Boehringer Ingelheim Venture Fund (BIVF), Forbion Capital Partners, High-Tech Gründerfonds (HTGF), MP Healthcare Venture Management, NRW Bank, Sunstone Capital and Wellington Partners Life Sciences.

Based on a total investment of €29.25m, the investors are set to make at least 3x and up to 10x their original investment, according to a source close to the situation.

"This transaction proves that European life sciences is a very attractive space," says Holger Reithinger of Forbion, although he emphasises that finding the value is not easy. "Every year at Forbion we review about 800 cases and invest in four or five, and in 2015 Rigontec was one of these. It is a very selective process and it's about the quality of science."

Building scale
Launched in January 2014 as a spinout from the Institute for Clinical Chemistry and Clinical Pharmacology at the University of Bonn, Rigontec develops ribonucleic-acid-based immunotherapeutics for the treatment of cancer and viral diseases.The treatment works by mimicking a viral infection, inducing anti-tumour immunity.

In October 2014, Wellington Partners and BIVF led a €9.45m series-A funding round for Rigontec alongside NRW Bank and HTGF. Reithinger says the early-stage investors took the role of forming the business and hiring Christian Schetter.

Forbion first invested in a €4.8m extension of the series-A in March 2015 alongside Sunstone. Reithinger had been tracking the company since 2011 when he met co-founder Gunther Hartmann, but at this time its second fund was already in a very advanced stage. "I followed the project and then in summer 2014, when we were raising for the third fund, we met the company again and continued our due diligence," he says.

Forbion introduced clinical advisers to the company as well as the opportunity to raise larger rounds. "We helped transform the clinical story from the patents and early development into a meaningful clinical programme," says Reithinger. "We added value by making sure the company had access to the best advisers to design the most innovative and modern clinical development." Forbion also introduced chairman Don deBethizy, a medical doctor and entrepreneur with 30 years' experience in biotechnology.

In September 2016, Forbion and HTGF led another €15m extension of the same round, which included MP Healthcare Venture Management.

Finding an exit
Reithinger says that attracting an international investor like Forbion was always part of Rigontec's strategy. "In order to become attractive to big pharma you need to show financial strength and a professional product development. Rigontec and the early-stage investors wanted to internationalise the group to gain visibility," he says.

While a trade sale to a pharmaceutical is the preferred route for a biotechnology company, Reithinger stresses it is not the only option: "We could also do an IPO. However, the acquirer is the leader in the immuno-oncology space and this route gives the highest likelihood of getting the drug to patients."

MSD reported $39.8bn in sales for 2016 and employs 69,000 people. Its core product categories are diabetes, cancer and hospital acute care.

People
Forbion Capital Partners – Holger Reithinger (general partner).
High-Tech Gründerfonds – Caroline Fichtner (investment director).
Rigontec – Christian Schetter (CEO).

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