From $30M launch round to $400M buyout deal — with $250M upfront — in 10 short months
F-Prime’s Ben Auspitz has turned a modest investment in his newly launched biotech Modis Therapeutics into a quick score on the M&A side. And the deal comes with some lessons on the speed rare disease biotechs can move these days, as well as the value they can create in short order.
Razor focused on rare mitochondrial DNA depletion disorders, Oakland, CA-based Zogenix $ZGNX has come up with a $400 million deal to bag the company and its fledgling pipeline — just 10 months after Auspitz put together a $30 million A round. The buyout terms include $250 million in cash and stock along with $150 million for regulatory approvals in the US and Europe.
The deal gives Zogenix chief Stephen Farr the chance to get this one right from the start. The company was embarrassed by a refuse-to-file notice from the FDA last April for their drug to treat Dravet syndrome. Regulators called out the company for sloppy and inadequate work.
Auspitz gambled on research by Michio Hirano of Columbia University Irving Medical Center and Ramon Martí at Barcelona’s Vall d’Hebron Research Institute. They came up with MT1621, the lead drug for thymidine kinase 2 deficiency (TK2d).
The VC is sharing the wealth with the rest of the syndicate, which includes OrbiMed, Aceras Life Sciences and Osage University Partners.
While they were discussing animal data for the launch round, the drug has since completed a Phase II pivotal program in 38 patients. Modis reports a strong p value (0.004) in survival, comparing their data to a historical control group. And Modis is also boasting about hitting key goals for “functional abilities, in some cases re-acquiring previously lost motor milestones.”
In recent months the biotech also picked up breakthrough status at the FDA and PRIME status at the EMA, encouraging plans for a quick dialogue with the FDA.
The therapy is not free of safety pitfalls, though.
Modis execs say that 2 adult-onset patients “stopped treatment due to asymptomatic increases in aminotransferases, without increases in bilirubin, which resolved upon discontinuation of treatment.”
It’s all in Zogenix’s hands now.