[Updated 6/9/14, 3:55 pm. See below.] Solstice Biologics is announcing a new CEO today, and it’s a testament to the San Diego startup’s rollercoaster ride to say the news is one of the least dramatic events in Solstice’s short 18-month existence.
New CEO and president Lou Tartaglia (pictured) has left Boston’s Third Rock Ventures, one of the most visible venture groups in biotech, where he spent seven years sorting through thousands of new ideas to help start a handful of companies based on cutting-edge science. That experience certainly helped him with his decision to join Solstice. “As a VC you have to vet so many things when making investment decisions,” Tartaglia tells Xconomy. “Most companies are complex. Solstice is probably more complex, with more drama than typical.”
That’s an understatement. Solstice is trying to solve a scientific problem—the delivery of RNA-related drugs into all kinds of tissue types—that has bedeviled a lot of sharp minds and cost companies billions of dollars. But it’s doing so amid a lawsuit against its chief scientific officer (PDF) and an attempted murder trial stemming from the September 2013 shooting of its academic co-founder, Steve Dowdy.
The best news of all for Solstice is that Dowdy, a researcher at the University of California, San Diego, whose idea for moving RNA into cells underpins the firm’s efforts, has recovered from the shooting. His former business partner Hans Petersen has been charged with attempted murder. The .45 caliber bullet passed through Dowdy’s abdomen but somehow did not do the damage such a large bullet would typically cause. “I’m back on my surfboard, bike riding, etc, pretty much back to normal,” Dowdy wrote to Xconomy in an e-mail exchange last week. “It took six months, but the docs don’t see any long-term consequences right now.”
“Steve is one lucky dude,” says Corey Goodman, a managing partner at the San Francisco venture firm VenBio and Solstice’s executive chairman.
Ronald Fletcher, whose sister was Petersen’s estranged wife, also was shot in the stomach the same morning but survived. Petersen awaits trial in San Diego for both attacks, and three counts of attempted murder in all because Dowdy’s wife also came under fire but was unharmed. Dowdy and Fletcher told their stories at a pretrial hearing in January, during which Petersen’s attorney said Petersen was “acting out of character, and his conduct was potentially bizarre and psychotic,” according to the San Diego Union-Tribune.
Petersen’s attorney was not immediately available for comment. [UPDATE: Petersen’s defense attorney, Marc Carlos, told Xconomy that the trial is set to begin September 15 in San Diego. Carlos did not dispute Petersen’s role in the shootings; he said the issue would be his mental state at the time. He faces the prospect of multiple life sentences.]
Dowdy, Petersen, and Solstice’s chief scientific officer Curt Bradshaw were all colleagues at Traversa Therapeutics, a San Diego biotech that was based on a different version of Dowdy’s RNA idea. It raised several million dollars in funding but didn’t get far, filing for Chapter 7 bankruptcy liquidation in 2012. Petersen was CEO and fired in 2011. His younger brother, Scott Petersen, was a top chemist at the company and before that, a post-doc in Dowdy’s lab. Both have alleged that Dowdy and Traversa chief scientific officer Curt Bradshaw, who now holds the same title at Solstice, essentially let Traversa die because they wanted to start anew with Solstice. Some of those allegations have made their way into the bankruptcy documents, including a lawsuit that the Traversa bankruptcy trustee, to recoup money for Traversa creditors, filed in April against Bradshaw.
Dowdy is not being sued, but last October, two weeks after being shot, Dowdy adamantly refuted the allegations—and in particular, claims by Scott Petersen about Solstice’s intellectual property rights—in a long open letter published on a blog dedicated to RNAi-related news.
In his e-mail last week, Dowdy told Xconomy he stands “100 percent” behind his October letter, and that the lawsuit against Bradshaw “is a joke initially fueled by the Petersen twins [sic] (prior to me being shot) and then perpetuated by a greedy lawyer for the trustee that wants to get paid big bucks or at least cover his costs.”
Bradshaw denied the suit’s allegations in a court filing in May, which was the most recent activity in the case. (It’s being argued before Judge Laura Taylor in U.S. Bankruptcy Court in San Diego.)
Dowdy is confident that the judge will throw the suit out and says his inclusion in the “unsubstantiated innuendo” puts his family in harm’s way. (Dowdy and his wife were asleep in bed when he was shot; prosecutors allege that Hans Petersen fired multiple shots through a glass door from three feet away. [A previous version of this story said incorrectly that Petersen shot Dowdy through his bedroom window.] After attacking Dowdy, Petersen moved on to Fletcher’s house, breaking in and shooting him through a bathroom door, according to Fletcher’s pretrial testimony.)
Like most VCs, incoming CEO and president Tartaglia is accustomed to vetting IP claims (although he wouldn’t comment on specifics concerning Solstice.) But vetting potential security risks isn’t something he’s had to do in the past. Asking around for advice, he said he’s gotten a “few jokes about bodyguards,” but he says he’s not concerned about his personal safety.
There are also risks involved in Solstice that biotech people are more accustomed to: The risk of putting time, money, and energy into an unproven technology. When Solstice launched in January 2013, its lead investor, VenBio’s Goodman, described to me the prospects of turning Dowdy’s RNA idea into new drugs as a “big if, with a capital I and capital F.” VenBio and Aeris Capital, a Swiss investment firm, were behind Solstice’s $18 million Series A. [CORRECTION: The name of Aeris was spelled incorrectly in a previous version.]
At launch time, Dowdy said the technology—which he calls RNNs, or ribonucleic neutrals—might move medicine forward in two ways. First, it would deliver the promise of RNA interference therapy into tissues beyond the liver and the eye, where many first-generation programs have focused because those cells are easier to reach with such fragile molecules. Second, Dowdy spoke of the potential for adjusting RNNs quickly as their targeted disease mutates—for example, as a pandemic flu virus spreads or a patient’s tumor genetics evolve. When asked last week if that ability to fine-tune a patient’s therapy is still the vision, Dowdy wrote that it was “more of a broader statement from me as a Professor than any suggestion of what Solstice may [or] may not do.”
Indeed, the company hasn’t yet named a disease it wants to tackle. Tartaglia says as CEO he’ll be asking potential licensing partners which tissues they’d like to see as therapeutic targets. Both Tartaglia and VenBio’s Goodman were careful to note that the RNN work has evolved since Solstice gained access to it in 2012. The main idea behind RNNs is to add extra chemical parts to the core RNA that change its electrical charge from negative to neutral and help it slip more easily into cells. There are other modifications, too, all of which are removed by enzymes within the cell, leaving the RNA to do its therapeutic work.
Others have tried a similar “prodrug” approach for RNA delivery—using modifications that acted as a sort of invisibility cloak to help the drug itself get to where it needs to be—but failed. When asked what makes Solstice different, Tartaglia said it’s confidential. “We’ve held it close to the chest… but it goes way beyond the ‘charged neutralization’ strategy.”
Joining Tartaglia is new CFO John Borgeson, a Pfizer veteran who worked with VenBio’s Goodman when both were at Pfizer’s short-lived biotech center in San Francisco. More recently he has worked with Goodman on VenBio startups.
Tartaglia leaves Third Rock as the Boston-based firm ramps up investment from its third fund and expands its San Francisco presence.
Like many Third Rock partners, he served interim executive roles at several startups that emerged from the venture firm, including Ember Therapeutics and Editas Medicine. (Third Rock is not an investor in Solstice.)
Tartaglia will continue to serve on the scientific advisory board of Ember and the board of directors of Ablexis. In an emailed statement, Third Rock spokeswoman Naomi Aoki said, “We will miss him, but we wish him well and fully support him as he enters this next chapter of his career.”