Chris Garabedian is back.
Two years after the former Sarepta CEO ended a turbulent reign marked by a roller coaster ride for investors — which is still not over, even after the controversial FDA OK of eteplirsen — Garabedian has won $15 million from some loyal backers at Perceptive Advisors to establish a company that promises to guide biotech startups through that first critical stage of development leading to proof-of-concept data.
This is brand new and its called Xontogeny. Now that he has the first tranche of a $25 million commitment in hand, Garabedian is putting together a small team that will be tasked with godfathering new drug development for a group of would-be entrepreneurs who either can’t or really don’t want to go the traditional VC route to fund a biotech startup.
“I was getting a number of calls from entrepreneurs who had an idea, had their hands on something of value, increasingly looking for someone to partner with but without a lot of deep industry experience,” Garabedian tells me. VCs either weren’t all that interested or wanted way too much equity. These were “unique and good opportunities that would never see a pathway forward unless they found someone to help them find a way forward.”
For about a half dozen to 10 new startups, Garabedian and his team plan to play that role.
At one point, Perceptive’s stake in Sarepta amounted to one of its largest investments. And that gave Garabedian time to get to know CEO Joseph Edelman and the other execs at Perceptive, a fund which backs public biotechs and often plays a crossover role in the lead up to an IPO. But Garabedian stresses that Xontogeny isn’t a fund. They may be able to put up a few hundred thousand for seed cash to get things started at a promising new venture, but most of Perceptive’s money will go to creating the team and funding their operation through the startup period.
The group will shepherd new drugs through a proof-of-concept event, providing the infrastructure on industry specialists that each new biotech doesn’t really need to start with from scratch. And then after that point, they can consider what to do next, with all the usual choices of industry sale, a venture round or IPO. And they plan to take equity in payment, with Garabedian filling a role as executive chairman or board member.
“It will be a relatively small team,” says Garabedian, “like a typical senior biotech operating team, about 12 with support staff” and expertise in things like preclinical tox and regulatory work. And they can play a virtual role in managing a range of startups. Garabedian plans to work with academics as well as some deeply passionate disease advocates who are looking to launch a company around a new drug prospect, perhaps licensed in. And he excitedly told me — in general terms — about several he’s already in talks with.
“What I’ve observed,” says Garabedian, who completed stints at Gilead and Celgene before taking the helm at Sarepta, “is that nothing has beaten the value of clinical proof-of-concept data.”
That’s still true today, he adds, even with biotech valuations running high. He watched Sarepta shares shoot up from $45 to $55 a share on Phase II data. Today, with a drug on the market, it’s $35.
So what did he learn at Sarepta that would help guide him at Xontogeny?
“I think Sarepta found itself and I found myself at the center of many things the industry and the FDA was grappling with,” he tells me. Maybe he was too transparent, he adds, though communicating with the patient community at every turn also provided a foundation of passionate support that was ultimately critical to the FDA approval process. But perhaps the best lesson is that running a public company is not his best role.
“I can be that public company CEO,” he says, “but that’s not what drives me. I inherited a30-year-old company that needed a lot of fixing, with minimal financing, no top tier board or scientific founders.”
With Xontogeny he can “work with people who want to work with me.” He can focus on development, instead of the distractions of managing a larger company in the public eye.
“A lot of people love the spotlight,” he says. “I really want to focus on development. I feel I can beat the industry averages.”
Now he has the money to find out.
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