AbbVie frontloads Morphic fibrosis development deal with $100M in cash
A few weeks ago Morphic Therapeutic came up with a big, $80 million round to advance its work into the clinic. Now they’re following up with a major discovery deal with AbbVie, where the deep-pocket pharma giant is paying a whopping $100 million for a line on a portfolio of oral fibrosis drugs.
Most preclinical deals start small and include some big milestones for success. It’s rare to see any discovery pact come with such a handsome upfront. But CEO Praveen Tipirneni tells me that the stars and the biotech’s platform were all aligned for this deal.
“I don’t know if I’ll ever be able to replicate this situation again,” he tells me. “It was incredibly competitive,” and that’s what made the cash payout possible.
How much are the milestones? Tipirneni, who gained experience in BD as the chief dealmaker for Cubist, isn’t saying — not unusual when a big player is involved in a deal. He’ll allow, though, that the figure “is dramatic.”
The company launched two years ago, grabbing a $51.5 million A round from a syndicate that included AbbVie so the team could start taking lab work created at Tim Springer’s lab at Harvard and using that to build a pipeline. That led to two programs — including the oral fibrosis drug — now being prepped for the clinic.
Springer has been working on integrins — proteins that are intended to help heal damage, but cause it when they run amuck — for years. The biotech’s claim to fame is that they have been building a structural approach that they believe allow development of small molecules to do the blocking — and that would offer any pharma company with the commercial rights a chance to hold on to a best-in-class drug, provided they’re proved right in the clinic.
In this pact Morphic will do the preclinical work through IND, at which point AbbVie will have a shot at picking up programs for a set licensing fee, taking over the clinical development work needed.
A key advantage to Morphic is that Phase I will offer considerable evidence of their lead drug’s chances of success, says Tipirneni, which offers a shot at a “near-term value inflection point.”
So is an IPO right around the next corner at the hard charging Morphic? Not likely, says the CEO, who has the cash on hand to pick his timing on any next steps on financing.