Ataxion Emerges From Stealth With $17M, Option Deal With Biogen
Last year, a once-promising Danish biotech named NeuroSearch completed a precipitous fall from grace and announced plans to shut down. But before it did, NeuroSearch managed to ship some of its assets off to other places. A few of them landed in the hands of Atlas Venture, which is giving them a second lease on life via a new startup called Ataxion that just might be sold to Biogen Idec (NASDAQ: BIIB) if things break right.
Ataxion is coming out of stealth mode today with plans to develop drugs that can subdue the symptoms of a group of debilitating central nervous system disorders known as hereditary ataxias. As Atlas has done in the past with startups like Arteaus Pharmaceuticals and Annovation Biopharma, it has unveiled Ataxion with its whole future potentially locked into place. The Boston VC firm has teamed up with Cambridge, MA-based Biogen to provide Ataxion with a $17 million Series A round, a sum calculated to shepherd Ataxion right to a potential near-term, investor payoff: Biogen has the option to buy Ataxion for an unspecified, prenegotiated price after the tiny biotech finishes its first Phase 1 clinical trial.
Of course, Ataxion has to deliver the goods first. Its job is to take a group of assets that Atlas venture partner and Ataxion CEO Josh Resnick would only describe as “pretty far along” in the discovery process, come up with a promising drug candidate, and show enough in an early-stage trial that Biogen decides to bring the startup in-house. If not, Ataxion would probably have to raise a Series B round—and come up with a Plan B.
That prospect doesn’t seem to faze Resnick, though. “This is a program that we would be excited to bring forward regardless of what happens,” he says. “We hope Biogen executes [the option], but if they don’t, and obviously the data look good, we would enthusiastically bring this forward into further clinical development.”
Ataxion is a product of Atlas Venture Development Corp., an initiative put together by the VC firm to pick up preclinical drug assets discovered by others that it thinks it can move forward more efficiently under its own care. The idea is to form a small startup around a set of assets, team up with a pharmaceutical partner, and drive the startup to a value inflection point—say, a Phase 2 trial—at which time that partner might have the exclusive chance to acquire it. In other words: create a lean, nimble startup biotech that can do the early clinical dirty work for someone else, and flip it for a return.
Ataxion has a decent start down that path. The startup is built around one of the surviving programs of the now-defunct NeuroSearch. A few years before it went bust, NeuroSearch spun out a number of its CNS assets into an entity called Aniona. Those assets included a platform and a group of preclinical programs dealing with the regulation of Purkinje cells, neurons in the cerebellum—the part of the brain that is in charge of coordination.
What piqued Atlas’ interest, according to Resnick, was the idea that these programs, if developed, might be able to relieve the symptoms of a broad range of ataxias, which are a group of more than 100 disorders characterized by dysfunction or degeneration of these Purkinje cells, leading to a variety of problems with walking, speech, and overall function. This intrigued Atlas, because while several pharmaceutical companies are trying to develop ways to improve the symptoms of specific subtypes of ataxia (like Friedreich’s ataxia, for instance), or even reverse their underlying causes, “the concept of a broad therapeutic is really something that as far as we know nobody is going after,” Resnick says.
“The disease area of ataxia, broadly, is really untapped,” he says. “The premise is that by alleviating the symptoms here, the hope is, at a minimum, to buy these folks years if not decades of quality of life, and probably alter the curve of morbidity and mortality.”