Startups, Venture

What’s a successful failure? Atlas’ Booth sounds taps for Merck-backed Quartet Medicine

Atlas Venture sounded taps for biotech startup Quartet Medicine this morning — done in by a troubling tox signal that scuttled its plans to develop a new chronic pain med.

Bruce Booth

Atlas partner Bruce Booth wrote a detailed blog post today spelling out what drove the investors to write off their $16 million investment in the company, which he deemed a disciplined, successful failure for a group that makes high-risk, high-reward gambles.

Booth, the chairman at Quartet, says about $4 million of that A round came from one of Atlas’ funds.

The Cambridge, MA-based biotech had raised $17 million for the Series A in late 2014 from a syndicate that also included Novartis Venture Funds, Pfizer Venture Investment and Partners Innovation Fund .

Merck provided another piece of the puzzle, coming in with $10 million upfront and the prospect of another $10 million in near term cash while holding out the prospect of a $575 million buyout deal if the biotech could steer through Phase IIa successfully, with proof-of-concept data.

Dallas-based Remeditex Ventures, LLC and two undisclosed Shanghai-based strategic investors added $6.25 million last year. The same year Gerhard Koenig was recruited as the CEO. Atlas seeded the company with science out of Boston Children’s Hospital and École Polytechnique Fédérale de Lausanne (EPFL) in Switzerland.

Quartet, though, never made it into the clinic. Focused on the BH4 pathway in search of a non-opioid pain med, they were torpedoed by unexpected neurological toxicity that couldn’t be managed. Writes Booth:

In August, Quartet observed some concerning and unexpected neurologic effects in the last few days of treatment in the GLP 28-day toxicology study, the final piece to round out our otherwise clean and complete IND package. Unfortunately, the tox signal was likely “on target” mechanistically….

Quartet, he added, could have burned through more money, he adds, but the right call was to shut it down.

In Quartet’s case, wasting another 2-3 years chasing a backup candidate with a highly improbable target product profile wasn’t a good use of either a great team’s time or investors’ money.

And they kept the team small. Booth tells me the shutdown involved 7 staffers, who have all gone on to new roles in the booming biotech hub.

“Wind down nearly complete (by year end is goal),” Booth said in a message to me. We have recycled everyone into EIR (entrepreneur in residence) roles (e.g., Gerhard, Mark, et al) or into other startups (e.g., Steve into Rodin). Even the EA/Office Manager, Oanh Sam, is now my EA.”

Now it’s on to other things.

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