Cydan Development, New Enterprise Associates’s orphan drug startup accelerator, has taken a look at around 600 assets since it was formed some three years ago. Sifting through all these potential drugs for diamonds in the rough has been an exhaustive process, perhaps even more so than the firm’s executives expected.
“It takes longer to de-risk [these assets] than we initially thought,” says CEO Chris Adams.
Yet the work Cambridge, MA-based Cydan has done is now beginning to lead to a portfolio of companies. Today, it’s announcing the launch of a startup called Imara with a $31 million Series A round and a plan to develop a drug for sickle cell disease. Imara is Cydan’s second startup, following Gaithersburg, MD-based Vtesse, which raised $25 million when it was formed in January of last year. Adams says two more Cydan startups could be launched in the next 12 months. If that pans out, the accelerator could have a total of four startups supported with the $26 million initial stake Cydan raised in 2013 from NEA, Pfizer Venture Investments, Alexandria Real Estate Equities, Bay City Capital, and Lundbeckfond Ventures.
Time will tell if this strategy will work. Cydan’s goal is to accelerate the development of rare disease drugs and as a result, generate returns for investors by selling these startups or taking them public. The hope is that these startups are just a few years away from generating the type of data that could lead to, say, a buyout. Vtesse has a drug for a rare condition called Niemann-Pick Type C1 disease in a trial that’s expected to wrap up by the end of next year, according to clinicaltrials.gov. And Imara’s $31 million round is expected to fund its drug, IMR-687, through human proof-of-concept studies in both adults and children with sickle cell. The trials should also produce data by the end of 2017. If the data are good, Cydan will have options going forward. Adams notes the “optimal outcome” would be selling these startups outright.
NEA formed Cydan in 2013 as part of a plan to put together a small group of experts to scour the globe for promising projects in rare diseases, sift through them, find some winners, and form companies around them. The idea of doing this isn’t entirely novel—other venture firms also start rare disease startups, and large pharmaceutical companies are always looking for promising drugs to move forward. But Adams and chief scientific officer James McArthur (who is also Imara’s CEO) contend there are a few things that make Cydan different. One is that it has a syndicate of investors on standby to finance the development of the projects it finds worthy. Second, they say, is the speed at which Cydan can go through different programs, test them, decide what to invest in, and choose the projects to kill.
“That is the model—killing [projects] fast for as little capital as you can,” Adams says.
McArthur says, for instance, that if Cydan wants to dig into a project, it signs an option to license the asset and then puts anywhere from $1.5 million to $2.75 million into it to run a series of tests and advance it. That work is outsourced, through a group of contract research firms that Cydan regularly works with (Cydan itself only consists of six people). Adams says Cydan has invested its own cash in … Next Page »