Sold For Parts, Accelerator Grad Allozyne Reaches End of the Line

Xconomy Seattle — 

With barely a whisper, Seattle biotech Allozyne has been broken up for parts, with most of its assets sold off earlier this summer to a previous licensing partner, Xconomy has learned.

The buyer was MedImmune, the biotech division of the multinational drug company AstraZeneca (NYSE: AZN), and the deal effectively ends the nine-year run of what was once a big name in Seattle biotech circles.

“MedImmune did not acquire Allozyne; however, we did purchase rights to selected patents and technology that the company had either developed or licensed in,” according to MedImmune spokeswoman Tracy Rossin.

Rossin did not elaborate, but a source familiar with the deal told Xconomy that while not a corporate change-over, the purchase is for “substantially all of Allozyne’s remaining assets, including IP.”

The main asset left under Allozyne’s roof is its lead compound, AZ01, according to chairman Steve Gillis (pictured above), who is a managing director in the Seattle office of ARCH Venture Partners, a top investor in the company. In late 2011, Allozyne’s CEO and president at the time, Meenu Chhabra, told Xconomy that AZ01, a longer-acting version of the multiple sclerosis treatment beta interferon, was “on a Phase 3 trajectory in 2012“—a big leap for a drug that had at that point only completed Phase 1 studies.

There’s no record in the NIH’s clinical trial database or Alloyne’s own press materials of a Phase 3 trial ever starting. ARCH’s Gillis told Xconomy that AZ01 is “Phase 3 ready” and “in the process of being partnered.”

Gillis also wrote in an e-mail that “the MedImmune transaction provided up front funds and future payouts” but did not disclose details.

Allozyne sign

The tenant directory in the lobby of 1600 Fairview Ave. East in Seattle.

It’s unclear how many—if any—employees remain. When asked, Gillis didn’t respond by publication time. (At last check, the Allozyne name is still posted in the lobby of the building the firm occupied in Seattle.)

Allozyne raised at least $50 million in venture funding from ARCH, MPM Capital, OVP Venture Partners, and Amgen Ventures, plus several million more in debts and warrants.

A high-profile graduate of Seattle’s Accelerator incubator, Allozyne suffered several bumps and bruises in recent years, starting around the time of Chhabra’s “Phase 3 trajectory” pronouncement. In late 2011, plans fell apart for a merger into the shell of a failed biotech, which would have taken Allozyne onto the public markets. From that point on, SEC records show its fundraising activity limited to a few million dollars in debt and warrants.

In early 2013, Xconomy reported that Allozyne let several employees go, in a move the company described as “furloughs.”

At that time, the company’s website listed only two remaining members of the management team, CEO Chhabra and chief scientific officer Ken Grabstein. Chhabra, who joined Allozyne as CEO in 2007, has since moved on. Earlier this summer she joined Proteostasis Therapeutics in Cambridge, MA, as president and CEO. The Proteostasis announcement, dated June 30, praised Chhabra’s work at Allozyne that “resulted in the lead program advancing directly from Phase 1 to Phase 3 and also triggered a strategic collaboration with a top tier pharmaceutical company that culminated in an eventual acquisition.”

Though the implications of this statement—that Allozyne was acquired outright and that AZ01 has reached Phase 3 testing—are contradicted by the comments from MedImmune, ARCH’s Gillis, and others, it was until now the only public acknowledgment of any sort of sale. We reached out to Chhabra for comment. Via e-mail, … Next Page »

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3 responses to “Sold For Parts, Accelerator Grad Allozyne Reaches End of the Line”

  1. Carlos Danger says:

    Ah yes, yet another smashing success of the Acellerator….I wonder whether any have yet to actually make a dime relative to the original cash invested by the VCs?

  2. Stephen McCraith says:

    Nice Job Ken!

  3. And then there was one……. Come on Theraclone (fka Spaltudaq).