Warburg Pincus invests in $50m pharma PIPE

The global private equity firm has agreed to invest $50m in publicly-traded biopharmaceutical company Allos Therapeutics in exchange for 42 percent ownership and two seats on the board of directors.

Global private equity firm Warburg Pincus has agreed to a private investment in publicly traded Allos Therapeutics, an oncology-focused biopharmaceutical company, purchasing $50 million (€38 million) of the company’s exchangeable preferred stock.

Under the terms of the deal, Warburg Pincus’ equity investment represents an approximate 42 percent stake in the company.

Warburg Pincus managing directors, Stewart Hen and Joanathan Leff, will become directors of the company, joining Michael Hart, president and chief executive officer of Allos, and four other board members.

Allos plans to use part of the proceeds from Warburg’s investment to fund research and development in its leading drug candidate, EFAPROXYN, which enhances the effectiveness of radiation therapy in cancer patients. For the twelve months ending December 31, 2004, Allos recorded a net loss of $21.8 million compared to a loss of $23.1 million for the comparable prior year period.

Warburg Pincus has been an active investor in the biotechnology industry, investing more than $1.2 billion in over 40 companies since the firm began focusing on the sectors in 1981. Last year, Warburg Pincus invested $32 million in protein crystallization company Altus as part of a $51 million Series C financing and $60 million in drug discovery company Neurogen, leading a $100 million private placement of the company’s common stock.

Since 1971, Warburg Pincus has raised 10 private equity funds with more than $19 billion in capital. The Allos investment was made through Warburg Pincus Private Equity VIII, a global fund that closed in 2002 on $5.3 billion.