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

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Proteostasis investor relations manager Susan Shepard replied that Chhabra “is legally prohibited from talking about Allozyne because of contractual obligations.”

Former CSO Grabstein now describes himself as independent, with his tenure at Allozyne ending in June 2014. He also declined to comment.

With technology spun out of the California Institute of Technology labs of David Tirrell—who was an Allozyne board member—and William Goddard, Allozyne specialized in engineering techniques that made slight changes to the structure of proteins. Known as site-specific modification, the approach allows therapeutically beneficial materials, such as powerful cell-killing toxins, to be attached to proteins to create, in theory, new or better pharmaceutical products. (When reached for comment, Caltech licensing officials called the Allozyne situation a confidential matter, and Tirrell did not return requests for comment.)

Allozyne soon put its weight behind AZ01, which was made by attaching a polyethylene glycol chain to the multiple sclerosis drug beta interferon. This process, called pegylation, creates a version that stays in a patient’s system longer, requiring less frequent dosing—a big deal for patients who have to sit for hours during infusions. Beta interferons were already the best-selling MS drugs; Allozyne wanted to make a better one.

But others had the same idea. It was a crowded field.

San Diego’s Ambrx, also a specialist in site-specific modification, had a development deal with Merck Serono. But five years later there’s no sign of it. (Ambrx tried unsuccessfully to go public this year, and its regulatory filings made no mention of the program.)

More important, Biogen Idec (NASDAQ: BIIB), the leader in multiple sclerosis medicine, beat Allozyne to the punch. Biogen announced positive Phase 3 data in 2013 from its own longer-lasting beta interferon—essentially an improvement upon its own flagship product Avonex. Then Biogen last month won approval for the new drug, now called Plegridy.

When asked how AZ01 stacks up now that Plegridy is on the market, Allozyne chairman Gillis wrote: “Longer half-life. Potential for less frequent dosing. Other players in the MS space are natural partners as they don’t have a Plegridy.”

Based on venture capital raised, Allozyne was for a while the most successful graduate of Seattle’s Accelerator, a biotech startup incubator formed in 2003. Thong Le was on the Accelerator board for seven years before rising to chief executive in early 2014. When asked about the Allozyne situation, he said it was the first he had heard of it.

Accelerator was not an investor in the company once it left the fold in 2007 and did not formally track its progress, but generally, Le said, “When a small company is an arms race there’s a small window of opportunity to be successful.”
As with the other Accelerator graduates that have been acquired or subjects of major transactions—Xori, VLST, and Acylin Therapeutics—the details of Allozyne’s purchase remain private.

Accelerator’s track record is important, because it is trying to expand its franchise to New York City, as Xconomy reported in August. It raised $51 million for its fourth fund as it prepared for its New York debut.

At the time of the New York launch, Le told Xconomy’s Ben Fidler that its mix of deals and investments is going to change, with not as many long-term bets on very early stage startups. “You’ll see a very different level of discipline and focus around the type of deals we’re going to do,” he said.

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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).