Oxford-AstraZeneca Covid-19 Vaccine Started in Conflict with University Ahead of Planned IPO


A startup behind the Covid-19 vaccine developed by the University of Oxford and AstraZeneca AZN 1.76%

PLC is planning an initial public offering that the backers hope will be the biggest market debut of an Oxford spin-off in years.

An obstacle: the university itself.

Nine-hundred-year-old Oxford is wrestling with how to rewrite its rules to foster companies created by its academics or born in its labs, as it grapples with one that has been brought into the spotlight by the pandemic. The startup, Vaccitech Ltd., has targeted potential investors and laid the groundwork for a public listing in New York as early as this year, according to people close to the marketing plans and documents reviewed by The Wall Street Journal. .

Investors are targeting an IPO valuation of around $ 700 million, with expectations that Vaccitech could be a $ 1 billion company by the end of the year. Big investors like the pharmaceutical giant Gilead Sciences Inc.

and Lilly Asia Ventures, a venture capital arm spun off from drugmaker Eli Lilly & Co., have expressed interest in investing, according to people familiar with the matter and documents reviewed by the Journal.

Vaccitech CEO Bill Enright declined to comment, as did a Gilead spokesperson. Lilly Asia Ventures did not respond to a request for comment.

Vaccitech is among a handful of once-unknown biotechnologies that have found their moment of opportunity in the pandemic. Vaccitech, however, has not yet played his role. Some investors have been nervous about high-profile stumbles in launching the injection and early negative perceptions about its effectiveness compared to other vaccines.

There is another problem. Long-standing tensions between the startup and Oxford have posed new hurdles in the complex fundraising process, according to people familiar with the matter. Plans for an IPO are still in flux and may still fall apart, these people said.

As highly communicable coronavirus variants spread across the world, scientists are racing to understand why these new versions of the virus are spreading faster and what this could mean for vaccination efforts. New research says the key may be the spike protein, which gives the coronavirus its unmistakable shape. Illustration: Nick Collingwood / WSJ

The university owns approximately 10% of the startup. Vaccitech, its bankers and lawyers have sought access, so far without success, to Oxford’s exclusive Covid-19 vaccine contract with AstraZeneca, according to these people. The pact was signed last spring when the drugmaker agreed to manufacture and distribute the Oxford vaccine. Vaccitech and his advisers have argued that the document outlines the financial and legal obligations that are key to valuing the company fairly and for regulatory disclosures.

Oxford and Vaccitech are discussing the narrative of the company’s role in vaccine development separately, these people say. Vaccitech wants Oxford’s imprimatur to commercialize its scientists’ initial work together with Oxford on the vaccine’s invention and their assistance in accelerating manufacturing for early clinical trials and providing safety data for regulators, according to people familiar with the matter. and related correspondence consulted by the Journal. The two sides also briefly discussed where to list, with some Oxford-affiliated investors favoring London. Vaccitech executives have insisted on Nasdaq in New York.

Oxford did not respond to requests for comment. AstraZeneca declined to comment.

Before Covid-19, Vaccitech was a little-known biotech company focused in part on vaccines, a low-profile field until last year. Oxford’s backing helped keep the company afloat. The Covid-19 injection has given new credit to Vaccitech’s own suite of vaccines and therapies, which are still in clinical trials, with the aim of fighting other viruses and cancers.

The conflict is unfolding as Oxford tries to reform the way it supports startups, like Vaccitech, that seek to turn science and technology into shareholder profit. The review is part of Oxford’s year-long quest to better compete with top US schools like the Massachusetts Institute of Technology and Stanford University to attract money and talent for startups.

Vaccitech was co-founded in 2016 by two Oxford scientists who are now at the center of vaccine development. They created a key technology that underpins the vaccine, using a modified chimpanzee cold virus to transport genetic material into human cells to activate immunity. Vaccitech owns the rights to that technology.

Executives and investors say the Covid-19 injection has demonstrated the potential of Vaccitech’s technology to fight hepatitis B, prostate cancer and human papillomavirus, global health problems with huge markets for effective treatments. Vaccitech scientists believe that the so-called viral vector technology used in the Covid-19 vaccine may unlock other therapies and weapons against infection, some of which it could license to large pharmaceutical companies.

Human trials of the Oxford-AstraZeneca vaccine last year, and real-world evidence since then, showed that it worked against Covid-19, preventing death and serious illness. But the trials also generated a confusing spectrum of results that created negative perceptions about its effectiveness compared to other vaccines. AstraZeneca has also been on the defensive over shortfalls in the doses it said it would deliver to Europe this month.

Other biotech companies behind Covid-19 vaccines have found gold in fundraising. Germany’s CureVac NV raised more than $ 200 million in a trading debut in August that valued it at more than $ 2 billion. That has skyrocketed past $ 15 billion as its vaccine has reached end-stage trials. Novavax shares Inc.,

which struggled for years to produce a marketable vaccine, has risen as it nears approval in the U.S. for its Covid-19 vaccine.

Vaccitech relinquished direct rights to Oxford’s Covid-19 vaccine and will instead take 24% of the royalties Oxford receives from AstraZeneca’s vaccine sales, the Journal previously reported.

Vaccitech’s value is based on a small part in potential future royalties from the Covid-19 vaccine, but much more on its plans to adapt vaccine technology to combat other diseases. That drug portfolio takes at least another three to four years to pay off, according to marketing documents. Investors previously valued the company at around £ 100 million, equivalent to $ 138.4 million, but now estimate that it is worth more than $ 250 million, based on updated non-public figures.

Vaccitech’s IPO plans are shaping up to be a test case for Oxford’s spin-out process. The university has supported more than 200 startups since the late 1980s, but its track record of nurturing big moneymakers has lagged behind major American institutions. Now, the British university is breaking its existing spin-out rules, according to private communications reviewed by the Journal and people familiar with the process.

In 2015, Oxford created its own venture company, Oxford Sciences Innovation PLC, raising around $ 800 million from outside investors. Oxford owns 5% of OSI and set out to take a 50% stake in promising startups, giving half of that automatically to OSI. Since then, Oxford has cut its founding stakes to around 28% on average, and is looking to lower it further for future startups, say people close to the process, in an effort to attract more founders and outside investors. OSI declined to comment.

Oxford’s big initial bets can give him great influence within the university’s startups, even after other investors dilute those holdings. Oxford and OSI, with a more than 40% stake in Vaccitech, ultimately lobbied biotech to sign their 50% stake in the vaccine’s intellectual property to enable the deal with AstraZeneca, the Journal previously reported. Vaccitech also stayed out of the negotiations with AstraZeneca.

AstraZeneca has publicly promised to provide three billion doses with no profit this year. At the time of the partnership agreement, private communications program, OSI told Vaccitech that, like Oxford, it would not be eligible for any vaccine royalties while Covid-19 remained a pandemic, and for a period of 12 months thereafter. .

Vaccitech backers pushing for contract access now want clarity on the full terms Oxford reached regarding royalty payments and any other benefits, once AstraZeneca begins to benefit from the doses, according to people familiar with the matter.

Write to Jenny Strasburg at [email protected]

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