Less than four months into its existence, Biogen spinoff Bioverativ has made its first big splash. The company has acquired True North Therapeutics, a privately held South San Francisco, CA, biotech, as part of a plan to forge an identity around rare blood diseases, not the core hemophilia business it was built on.
Waltham, MA-based Bioverativ (NASDAQ: BIVV) will pay $400 million up front for True North, and may tack on another $425 million in downstream payments if the company’s lead drug TNT009, for the rare cold agglutinin disease (CAD), succeeds in clinical testing. Bioverativ will pay for the deal with a combination of cash and debt.
CAD is a rare condition in which cold temperatures trigger an antibody attack on the body’s own red blood cells, often leading to severe anemia. There are no approved therapies for CAD, which affects an estimated 5,000 people in the U.S., according to Bioverativ. Patients need frequent blood transfusions to help fend off anemia, but those procedures come with their own complications.
True North’s drug is an antibody that blocks a protein called C1s, part of the complement system, a family of proteins in the innate immune system that help antibodies kill bacteria. Complement proteins can also misfire, however, and attack the body’s own cells—like red blood cells in the case of CAD. TNT009 has already completed Phase 1b testing. True North also has a second drug in development, TNT020, which could be administered less frequently and through a subcutaneous injection, rather than an IV infusion.
For Bioverativ, which formally separated from Biogen (NASDAQ: BIIB) in February, the deal is the first move it’s made to supplement a pipeline that, up until now, has been heavily dependent on two hemophilia products, Eloctate and Alprolix. The two products—which originated from Biogen’s 2007 buyout of Syntonix Pharmaceuticals in 2007—generated nearly $850 million in revenue in last year, up from $560 million in 2015. Nonetheless, however, competition is moving fast in the hemophilia space from gene therapies and other drugs, putting pressure on Bioverativ to protect itself, and the company doesn’t have any other drugs currently in human clinical trials. Its closest options are longer-lasting versions of Eloctate and Alprolix—BIVV001, for hemophilia A, and BIVV002, for hemophilia B—that are both in preclinical testing.
Bioverativ, however, spun out of Biogen with cash for deals—it had $358 million in cash at the end of March and, at the time, no debt—and has been zeroing in on rare blood disorders, building off of an existing partnership with Sangamo Biosciences (NASDAQ: SGMO) on potential treatments for sickle cell disease and beta-thalassemia. CEO John Cox said in a statement that the acquisition bolsters the company’s plan to “become the leading rare disease company focused on blood disorders.”
The deal also marks a second payoff for the backers of True North, which include OrbiMed Advisors, Kleiner Perkins Caulfield & Byers, MPM Capital, SR One, and Baxter Ventures. All but Baxter were also investors of iPierian, which spun out True North in 2013 and was acquired by Bristol-Myers Squibb (NYSE: BMY) a year later for $175 million (Bristol, incidentally, just flipped the assets it acquired in the iPierian deal to Biogen for $300 million up front in April). Now they’ve cashed out a second time.
Bioverativ will host a conference call this morning to discuss the deal. Here’s more on the company and the rationale behind its split from Biogen.