Oxford-AstraZeneca Covid-19 Vaccine Startup in conflict with the university before the 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 supporters hope will be the biggest debut in the Oxford spinoff market in years.

An obstacle: the university itself.

Oxford, at nine hundred years old, is struggling to rewrite its rules to foster companies created by its academics or born in its laboratories, while it is in conflict with one that was put in the spotlight by the pandemic. The startup, Vaccitech Ltd., has launched for potential investors and laying the groundwork for a stock listing in New York this year, according to people close to the marketing plans and documents reviewed by The Wall Street Journal.

Investors are looking at an IPO valuation of about $ 700 million, with the expectation that Vaccitech could be a $ 1 billion company by the end of the year. Major investors, such as pharmaceutical giant Gilead Sciences Inc.

and Lilly Asia Ventures, the disengaged venture capital arm of pharmaceutical company Eli Lilly & Co., expressed interest in investing, according to people familiar with the matter and documents reviewed by the Journal.

Vaccitech Chief Executive Bill Enright declined to comment, as did a spokesman for Gilead. Lilly Asia Ventures did not respond to a request for comment.

Vaccitech is among a handful of formerly obscure biotech companies that have found their moment of opportunity in the pandemic. Vaccitech, however, has not yet capitalized on its role. Some investors were nervous about the notorious stumbling blocks in launching the injection and the first negative perceptions about its effectiveness compared to other vaccines.

There is another obstacle. Longstanding tensions between the startup and Oxford have raised new obstacles in the complex fundraising process, according to people familiar with the matter. Plans for an IPO are still underway and could fall apart, these people said.

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

The university owns about 10% of the startup. Vaccitech, its bankers and lawyers have sought access, so far unsuccessfully, 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 produce and distribute the Oxford vaccine. Vaccitech and its consultants argued that the document spells out the financial and legal obligations that are critical to assessing the company fairly and for regulatory disclosures.

Oxford and Vaccitech are discussing separately about the company’s role in developing the vaccine, these people say. Vaccitech wants the Oxford imprimatur to commercialize the initial work of its scientists alongside Oxford in inventing the vaccine and its assistance in speeding up manufacturing for the first clinical trials and providing safety data for regulators, according to people familiar with the matter. and related correspondence seen by the Journal. The two sides also briefly discussed where to list, with some investors affiliated with Oxford 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 biotechnology startup, focused in part on vaccines – a discreet field until last year. Oxford’s support helped keep the company afloat. The Covid-19 injection lent new credit to Vaccitech’s own set of vaccines and therapies, still in clinical trials, aimed at fighting other viruses and cancers.

The conflict is unfolding as Oxford tries to reshape the way it supports startups, such as Vaccitech, which seek to transform science and technology into returns for shareholders. The redesign is part of Oxford’s quest to compete better with leading schools in the United States, such as the Massachusetts Institute of Technology and Stanford University, in attracting talent and money to startups.

Vaccitech was co-founded in 2016 by two scientists from Oxford, now at the center of vaccine development. They created a fundamental technology for injection, using a chimpanzee cold virus modified to transport genetic material to human cells to activate immunity. Vaccitech owns the rights to this technology.

Executives and investors say the Covid-19 injection showed 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 their so-called viral vector technology used in the Covid-19 vaccine could unlock other therapies and weapons against infection, some of which could be licensed to major pharmaceutical companies.

Human tests of the Oxford-AstraZeneca shot last year – and evidence from the real world since then – showed that it worked against Covid-19, preventing deaths and serious illnesses. But the tests also generated a confusing spectrum of results that created negative perceptions about its effectiveness compared to other vaccines. AstraZeneca is also on the defensive regarding the reduction in doses that it said it would deliver to Europe this month.

Other biotechnology companies behind the Covid-19 vaccines found gold in fundraising. Germany’s CureVac NV raised more than $ 200 million in a stock debut in August that valued it at more than $ 2 billion. That figure exceeded $ 15 billion when his vaccine reached the final testing stage. Novavax shares Inc.,

who struggled for years to produce a marketable vaccine, increased as it approached US authorization for its Covid-19 vaccine.

Vaccitech has given up the direct rights to Oxford’s Covid-19 vaccine and instead takes 24% of all royalties that Oxford receives from AstraZeneca’s vaccine sales, the Journal previously reported.

Vaccitech’s value is based in small part on the potential future royalties from the Covid-19 vaccine, but much more on its plans to adapt the vaccine technology to fight other diseases. This drug pipeline needs at least another three to four years to bear fruit, according to marketing documents. Previously, investors valued the company at around £ 100 million, equivalent to $ 138.4 million, but now they estimate it to be worth more than $ 250 million, according to updated nonpublic data.

Vaccitech’s IPO plans are shaping up as a test case for the Oxford spin-off process. The university has supported more than 200 startups since the late 1980s, but its track record of fostering big money earners has lagged behind major American institutions. The British university is now destroying its existing spinout rules, according to non-public communications analyzed by the Journal and people familiar with the process.

In 2015, Oxford created its own venture company, Oxford Sciences Innovation PLC, raising about $ 800 million from outside investors. Oxford owns 5% of OSI and set out to have a 50% stake in promising startups, giving half of that automatically to OSI. Oxford has since reduced its stake in the foundation to about 28% on average, and is looking to shrink even 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 large initial holdings can give it an outsized influence within university startups, even after other investors dilute those holdings. Oxford and OSI, with a stake of more than 40% in Vaccitech, pressured biotechnology to sign their 50% stake in the vaccine’s intellectual property to allow the agreement with AstraZeneca, the Journal previously reported. Vaccitech was also kept out of negotiations with AstraZeneca.

AstraZeneca has publicly pledged to supply three billion doses without profit this year. At the time of the partnership agreement, a private communication show, OSI told Vaccitech that, like Oxford, it would not be eligible for any vaccine royalties as long as Covid-19 continued a pandemic, and for a period of 12 months later.

Vaccitech advocates who push for access to the contract now want clarity on the full terms that Oxford has reached in relation to the payment of royalties and any other benefits, once AstraZeneca starts to profit from the doses, according to people familiar with the matter. .

Write to Jenny Strasburg at [email protected]

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