Vulcan’s Biotech Windfall, BiPar Sciences, Sparks “Fundamental” Cancer Advance

Vulcan Capital, the investment group that controls billionaire Paul Allen’s fortune, generates lots of headlines for its big losses in Charter Communications. But few people have made much of the fact that Seattle-based Vulcan generated one of the biggest venture returns in the country this year from a cancer drug developer it founded four years ago, BiPar Sciences.

Vulcan led the seed financing round for this company back in 2005, and pumped $13 million in capital into it through its lifetime. Now it stands to reap a payday of more than $100 million in cash through its sale to Paris-based drug giant Sanofi-Aventis for $500 million, says Vulcan Capital managing director Steve Hall. That kind of 7.5-fold return on investment has helped propel Vulcan into the top 10 percent performance tier of all U.S. venture funds over the past five years, Hall says.

“This is potentially a fundamental advance against solid tumors,” says Michael Kranda, who led Vulcan’s investment in Brisbane, CA-based BiPar. “When you talk to the leading companies and the leading doctors in this space, we’re seeing them compare the impact of this to (Gleevec). That drug obliterates tumors, and you don’t see many drugs get mentioned in conversation like that.”

If BiPar can really deliver results like that later this month, it will be one of the biggest stories in the world of cancer research this year. Novartis’ imatinib (Gleevec), was first approved by the FDA in 2001 as the first drug ever to turn off the signal of a protein that causes chronic myeloid leukemia. What used to be a death sentence is now a disease that has a 95 percent five-year survival rate. Not surprisingly, the drug has been a smash hit in the marketplace, generating $3.67 billion in worldwide sales in 2008.

BiPar has generated buzz because it aims to develop the first drug to block an enzyme called PARP. This approach—which is being pursued by Genentech and others—is designed to prevent cancer cells from repairing their own DNA, which is one of the deft little tricks tumors employ to bounce back after their DNA has been damaged by chemotherapies. BiPar’s lead drug, BSI-201, is being studied in mid-stage clinical trials for an aggressive form of breast cancer known as the “triple negative” variety, as well as ovarian cancer and other tumor types.

This drug will have a big coming out party on May 31—and we’ll see why Sanofi paid so much—when its latest clinical trial results will be detailed at the American Society of Clinical Oncology’s annual meeting in Orlando, FL. The drug will be showcased by ASCO’s PR machine for a press conference in front of all the major U.S. newspapers and wire services, and will be on display in a coveted plenary presentation, which usually draws several thousand leading cancer doctors in one room.

So does this mean Paul Allen might regain his appetite for biotech investing? This is a big question, because even though Allen has backed away from the sector … Next Page »

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4 responses to “Vulcan’s Biotech Windfall, BiPar Sciences, Sparks “Fundamental” Cancer Advance”

  1. biobear says:

    How much of BiPar’s purchase price will be realized initially? Isn’t the entire purchase price contingent on more milestones being hit?

  2. It’s true that the BiPar purchase price depends on milestones. The companies didn’t disclose what they are, or how much of the purchase price remains to be received.