Oxford-AstraZeneca Covid-19 vaccine launch in conflict with university ahead of planned IPO

Nine-hundred-year-old Oxford is struggling to rewrite its rules for promoting businesses founded by its academics or born in its laboratories, while at a deadlock with one put in the spotlight by the pandemic. According to people close to The Wall Street Journal’s plans and marketing documents, the startup, Vaccitech Ltd., has suggested potential investors and laid the groundwork for a New York stock exchange listing.

Investors are aiming for an IPO valuation of approximately $ 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, a venture capital arm spun off from drug manufacturer Eli Lilly & Co., have expressed an interest in investing, according to people familiar with the matter and documents reviewed by the Journal.

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

Vaccitech is one of the few ever obscure biotech companies to have found their chance in the pandemic. However, Vaccitech has not yet played its role. Some investors were nervous about high-profile stumbling blocks in the shot’s rollout and early negative perceptions about its effectiveness compared to other vaccines.

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

The university owns about 10% of the startup. According to these people, Vaccitech, its bankers and lawyers have so far unsuccessfully sought access to Oxford’s exclusive Covid-19 vaccine contract with AstraZeneca. The pact was signed last spring when the drug company agreed to make and distribute the Oxford vaccine. Vaccitech and his advisers have argued that the document describes financial and legal obligations essential to the fair valuation of the company and to regulatory disclosures.

Oxford and Vaccitech are separately discussing the story of the company’s role in the development of the vaccine, these folks say. Vaccitech wants Oxfords imprimatur to market the early work of its scientists alongside Oxford in inventing the vaccine and its help in speeding up production for early clinical trials and providing safety data for regulators, according to people familiar with the issue and related correspondence being viewed by the Journal. The two sides also briefly fought over where to list, with some Oxford-affiliated investors preferring London. Vaccitech executives have pushed for 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 startup that focused in part on vaccines – an unremarkable field until last year. Oxford’s support helped keep the company afloat. The Covid-19 injection has given new credibility to Vaccitech’s proprietary line of vaccines and therapies, which are still in clinical trials, targeting other viruses and cancers.

The conflict unfolds as Oxford seeks to reshape the way it supports startups, such as Vaccitech, who want to turn science and technology into shareholder returns. The overhaul is part of Oxford’s years of quest to better compete with leading American schools such as the Massachusetts Institute of Technology and Stanford University in attracting startup money and talent.

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

Executives and investors say the Covid-19 injection has shown the potential of Vaccitech’s technology to fight hepatitis B, prostate cancer and human papillomavirus – global health challenges with huge markets for effective treatments. Vaccitech scientists believe the so-called viral vector technology used in the Covid-19 vaccine could unlock other therapies and weapons against infection, some of which can be licensed to major pharmaceutical companies.

Human trials with last year’s Oxford AstraZeneca shot – and out of real life since – showed it worked against Covid-19, preventing deaths and serious illness. But the studies also yielded a confusing spectrum of results that gave a negative picture of its effectiveness compared to other vaccines. AstraZeneca has also been on the defensive against dose shortages it said it would deliver to Europe this month.

Other biotech companies behind Covid-19 vaccines have won gold for fundraising. German CureVac NV raised more than $ 200 million in an equity debut in August that valued it at more than $ 2 billion. That’s up more than $ 15 billion as the vaccine enters the final stages of trials. Shares of Novavax Inc.,

struggling for years to produce a marketable vaccine has risen as it nears approval of the Covid-19 vaccine in the US.

Vaccitech gave up direct rights to Oxford’s Covid-19 vaccine and instead earns 24% of the royalties Oxford receives from sales of AstraZeneca vaccines, the Journal previously reported.

Vaccitech’s value is based in part on possible future royalties from the Covid-19 vaccine, but much more on its plans to adapt vaccine technology to combat other diseases. That pipeline of drugs will take at least another three to four years to bear fruit, according to marketing documents. Investors previously valued the company at around £ 100 million, which equates to $ 138.4 million, but now estimate it to be worth more than $ 250 million, according to updated, non-public figures.

Vaccitech’s IPO plans are 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 encouraging big money makers has lagged behind the leading US institutions. Now the British university is tearing up its existing spin-out rules, according to non-public communication reviewed by the Journal and people familiar with the process.

In 2015, Oxford founded its own venture company, Oxford Sciences Innovation PLC, which raised approximately $ 800 million from outside investors. Oxford owns 5% of OSI and wanted to take a 50% stake in promising startups, with half of that being automatically given to OSI. Oxford has since rolled back its founding stake to an average of about 28%, and it plans to shrink that further for future startups, people close to the process say, in an effort to attract more founders and outside investors. OSI declined to comment.

Oxford’s great initial stake can give it inordinate power within the university’s startups, even after other investors have diluted those interests. Oxford and OSI, with over 40% stake in Vaccitech, ultimately pressured the biotech to sign its 50% share of the vaccine’s intellectual property to enable the AstraZeneca deal, the Journal previously reported. Vaccitech was also kept out of negotiations with AstraZeneca.

AstraZeneca has publicly pledged to provide three billion non-profit doses this year. At the time of the partnership agreement, as evidenced by private communications, OSI told Vaccitech that, like Oxford, it would not be eligible for vaccine royalties as long as Covid-19 remained a pandemic, and for a period of 12 months thereafter.

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

Write to Jenny Strasburg at [email protected]