East Coast Biotech Roundup: Proteon, Ataxion, NY Genome/Watson, & More

Xconomy Boston — 

Deals, deals, and more deals on the East Coast this week. Some came together, some fell apart. Some might help change the face of cancer treatment—or they could fall flat. That’s the nature of dealmaking. Those stories and more below.

—Sometimes an option-to-buy deal never leads to a buyout: see Cambridge, MA-based Proteon Therapeutics. A few years ago, Swiss drug giant Novartis secured the right to buy Proteon Therapeutics for up to $550 million following a Phase 2 trial of the company’s experimental drug, PRT-201. But as CEO Timothy Noyes told me earlier this week, talks broke down last year, and now the company is going in a different direction. I spoke with Noyes about the ill-fated Novartis deal, and what now lies ahead for Proteon (spoiler alert: a Series C is likely coming this summer).

—Danish biotech NeuroSearch may have gone bust last year, but it managed to ship a few assets out before it did. A few of them landed in the hands of Atlas Venture, which has formed a new startup around them: Ataxion. The Cambridge startup came out of stealth mode this week not only with a $17 million Series A from Atlas and Biogen Idec (NASDAQ: BIIB), but also a prenegotiated buyout option the Massachusetts biotech could exercise after the first experimental drug the startup develops for hereditary ataxias completes a Phase 1 study. Option deals, of course, don’t always work out (see Proteon above), but Atlas has done these types of deals before: Eli Lilly, for instance, acquired Arteaus Pharmaceuticals in a similarly-styled transaction earlier this year. I spoke with Ataxion CEO and Atlas partner Josh Resnick about the VC firm’s strategy, and what the new startup has planned.

—Watson is coming to genomics. This week, the New York Genome Center and IBM cut a deal to test out the supercomputer as a genomics tool—specifically, to help come up with personalized treatment regimens for patients with glioblastoma, a deadly brain cancer. The idea is to speed up the process of turning genomic insights into tailored treatments—a notoriously laborious process—and take advantage of Watson’s ability to learn, which could help researchers find treatment options they might not have otherwise. The hope is that this will improve care, and extend patients’ lives along with it. I spoke with Toby Bloom, the NY Genome Center’s deputy scientific director of informatics, about the initiative this week.

—New York-based Intercept Pharmaceuticals (NASDAQ: ICPT) scared investors last Friday when a regulatory filing showed its experimental liver drug might be to blame for some serious safety issues in a mid-stage trial. Shares tumbled more than 16 percent. So Intercept quickly turned around two days later and said that that drug, obeticholic acid, nailed a late-stage trial treating people with primary biliary cirrhosis, a rare disease where the immune system gradually degrades the bile cuts. The strategic two-step helped Intercept recoup from last week: shares rose about 8 percent.

—Immuno-oncology grabbed headlines once again this week, as New York-based Bristol-Myers Squibb (NYSE: BMY) cut a $350 million deal with South San Francisco, CA-based Five Prime Therapeutics (NASDAQ: FPRX) to discover, develop, and commercialize drugs that help drive an immune system attack against tumors. Bristol paid Five Prime $20 million up front, and another $21 million to buy 4.9 percent of Five Prime’s shares. The West coast biotech is also getting $9.5 million in research funding and could see as much as $300 million in future payments if the drug candidates in the deal hit various milestones. Five Prime’s shares have since jumped about 20 percent.

—Another biotech with ties to Bristol-Myers was in the news this week, as Seattle’s Alder BioPharmaceuticals filed for an IPO aiming to raise up to $115 million. Back in 2010, Bristol cut a deal worth up to $1.35 billion with Alder to grab rights to an experimental drug that binds to the inflammatory protein IL-6. Bristol’s taking the lead on developing the drug, clazakizumab, for rheumatoid arthritis and psoriatic arthritis. Alder, meanwhile, plans to use much of the IPO cash to develop an experimental antibody drug for migraines.

—Cambridge-based NinePoint Medical made it from seedling to commercial-stage company with a $33 million Series A round. This week, NinePoint finally reloaded, grabbing a $34.5 million Series B equity financing led by new investor Corning (NYSE: GLW) and founding backers Third Rock Ventures and Prospect Venture Partners. NinePoint is using the cash to help roll out the NvisionVLE, a medical imaging system used in endoscopy procedures. I spoke with CEO Charles Carignan about what the company needs to do to break even.

—Cambridge and Cincinnati, OH-based Akebia Therapeutics (NASDAQ: AKBA) priced its IPO this week at $17 per share, the high end of its projected $14 to $17 per share range. Akebia sold 5,882,353 and raised about $100 million in the offering. The company is using the cash to support a Phase 3 trial for an oral anemia drug it’s developing called ALB-6548.

—Cambridge-based Aveo Oncology (NASDAQ: AVEO) lost Astellas Pharma as a collaboration partner last month, and now it’s regained full rights to experimental cancer drug AV-203, effectively ending a deal it cut with Biogen in 2009. Aveo plans to seek out a partner with “established oncology capabilities” to help drive AV-203 forward. The company completed a Phase 1 trial of AV-203 in May 2013.

—Princeton, NJ-based Agile Therapeutics has joined the IPO queue, seeking $69 million to help develop a once-weekly contraceptive patch, Twirla, that would be an alternate to oral birth-control pills. Agile expects to report data from an ongoing Phase 3 clinical trial next year. Like Johnson & Johnson’s Ortho Evra patch, Agile’s patch delivers doses of estrogen and progestin to stop ovulation. But Agile delivers those drugs in lower doses, which, the company claims, makes its product safer. The FDA slapped a black box warning on Ortho Evra two years ago to alert patients of the risk of developing blood clots. Agile would trade on the Nasdaq under the ticker symbol “AGRX.” ProQuest Investments (30.4 percent), Care Capital Investments (26.6 percent), Investor Growth Capital (26.6 percent), and Aisling Capital (8.9) own most of Agile’s stock.

—Aranata Therapeutics (NASDAQ: PETX) grabbed the rights to four experimental cancer immunotherapies Princeton, NJ-based Advaxis (NASDAQ: ADXS) has been developing for dogs, among them an experimental drug known as ADKX-HER2. Aranata paid Advaxis $1 million up front and made a $1.5 million equity investment in Advaxis stock and warrants. Advaxis could also see $6 million in clinical and regulatory milestones per drug, and $28.5 million in commercial milestones as well.

—Lexington, MA-based SynapDx is teaming up with the Broad Institute of Harvard and MIT to try to develop next-generation sequencing techniques that could help boost the accuracy of the type of blood-based autism diagnostics the startup is developing. I profiled SynapDx, and the autism test it’s been developing, back in July.

—New York-based startup AbilTo raised a $6 million Series B round led by BlueCross BlueShield Venture Partners and Sandbox Industries, and including existing backer .406 Ventures. AbilTo provides behavioral “interventions” for people with chronic or traumatic health conditions like a diagnosis with breast cancer or type 2 diabetes, or a heart attack. The startup connects patients with therapists for remote sessions over the course of eight weeks to help deal with a big transition, manage their condition, and adjust emotionally and physically.

—Cambridge-based Ironwood Pharmaceuticals (NASDAQ: IRWD) kicked off a Phase 2a clinical trial testing of an experimental drug it’s been developing, IW-3718, in patients with gastroesophageal reflux disease who haven’t responded to prior treatments. Ironwood is enrolling 90 patients in the study, and expects to report data from the trial in the first half of 2015.

—New Brunswick, NJ-based Johnson & Johnson (NYSE: JNJ) this week stopped a Phase 3 trial testing its long-lasting form of schizophrenia treatment paliperidone (Invega Sustenna) because the drug showed such an obvious benefit for patients. The drug uses Dublin and Waltham, MA-based Alkermes’ (NASDAQ: ALKS) extended-release technology. J&J plans to submit a new drug application to the FDA by the end of the year.