Over the past few years, Versant Ventures has set up outposts in places like New York, Montreal, and Vancouver, with the goal of starting some new life sciences companies outside the biotech hotbeds of San Francisco and Boston. Two of those startups, known as Inception IBD and Kyras Therapeutics, are launching today with some financial support and, in Inception IBD’s case, a buyer already in place.
Inception IBD is the sixth spinoff of San Diego-based Inception Sciences, a 70-employee operation Versant runs to incubate academic ideas and turn them into biotech startups—often, “build to buy” companies launched with an acquirer already secured. Versant, itself headquartered in Menlo Park, CA, has set up Inception research sites in different cities, and Inception IBD is the first company to come from its facility in Montreal.
Inception IBD has raised $14.1 million in a Series A financing led by Versant and joined by Fonds de solidarite FTQ (a Quebec-based organization that invests in local businesses) and the Paris-based Inserm Transfert Initiative.
As has been the case with some of the other Inception spinouts (known as Inception 1, 2, 3 and so on), Inception IBD has already inked a collaboration and potential buyout deal. Summit, NJ-based Celgene (NASDAQ: CELG) will work with the startup to develop drugs for ulcerative colitis and Crohn’s disease—two forms of inflammatory bowel disease, or IBD, hence the name of the company—and could buy the startup for an unspecified, prearranged price later on. Celgene could also kick in up to $40 million in cash to support the startup’s progress.
Versant partner Jerel Davis says the trigger for Celgene to buy Inception IBD would kick in before the first drug to come out of the deal began human clinical testing. This is similar to what Inception has done in some other cases; Roche, for instance, can buy Inception 5 when a multiple sclerosis drug the two are developing is ready for its first trial. Structuring a deal this way puts a lower ceiling on potential returns than, say, forming a large company and taking it public, or even selling it further along in its development. But it also reduces the risk involved in biotech company creation.
“For us, we want to bet on big science and have these things be acquired preclinically for a nice number,” Davis says.
IBD is a very competitive field and Celgene, which has been building a presence in inflammatory diseases, knows this well. Two of its largest deals over the past few years, a buyout of Receptos Pharmaceuticals ($7.2 billion) and a licensing deal with Nogra Pharma ($710 million up front), were both centered on experimental IBD treatments.
In Inception IBD, Celgene is betting on a discovery effort—that a team of experts can unearth new drug targets for IBD, and eventually small-molecule drugs, that others haven’t. The startup’s scientific founders are IBD experts from the French institution Inserm—Eric Olger-Denis, Xavier Treton, Jacques Mizrahi, and Yoram Bouhink—who have been using genomic insights and discovery tools to identify targets that affect the underlying causes of IBD, and to develop a mouse model that could allow testing of potential IBD drugs. “That sounds trivial, but if you know IBD, the field has been plagued by very poor models,” Davis says. “We’re going to go after hallmarks of the disease and underlying causes of the disease that we think others have not.”
Inception IBD has licensed the work from Inserm, and a team of drug developers at Inception’s Montreal site will advance it. These folks include Paul Anderson, the chief scientific officer of Inception IBD and the head of the Montreal research facility; chief operating officer Clare Ozawa; and Peppi Prasit, the CEO of Inception. Prasit and Anderson both have Canadian roots, having worked at the old Merck Frosst Canada site in Montreal, which was shut down several years ago after producing a number of drugs for Merck—among them montelukast (Singulair) and etoricoxib (Arcoxia). “Montreal became a clear place to go to get the band back together,” Davis says. It’s also the type of thing Versant and Celgene have done before. Versant started a cancer drug discovery effort in Quanticel Pharmaceuticals of Seattle in 2010, and gave Celgene an exclusive option to buy it a year later. Celgene exercised that option in April.
The other startup launching today, Kyras, is the first company to emerge from Highline Therapeutics, the Manhattan-based startup incubator Versant formed in August to seed biotech companies in New York. Kyras is based on the scientific work of Columbia University chemist Brent Stockwell, and is backed by a $5 million Series A round led by Versant. Versant venture partner and Highline CEO Carlo Rizzuto will serve as the initial CEO of the company.
The idea behind Kyras is to … Next Page »