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Bad News this Week for Biotech Deals?

 

Curator: Stephen J. Williams, Ph.D

 

Last week in biotech ( 3/7-3/11/2016) had a plethora of disappointing stories related to biotech drug development and hits to biotech investing and VC.  Since October of 2016 the biotech index has lost 35% to today (see Biotech ETFs Hit 52-Week Lows: Time to Buy?) however were the hit back in October a signal of some of the listed events below (as shown on Biospace News) and includes:

  •  an long-time biotech startup with failure of mesothelioma trial who has struggled in the past
  • multiple clinical trial failures forces the de-listing of a NASDAQ company (other biotechs this year had similar problems)
  • more problems with drug development for Duchenne’s Muscular Dystrophy

GlaxoSmithKline dumps Five Prime’s cancer drug in the midst of Phase I

March 11, 2016 | By Damian Garde

GSK gave Five Prime a 180-day notice that it’s nixing its license to the company’s FP-1039, which is designed to block the spread of cancer by interrupting protein signaling. The decision follows GSK’s January move to stop developing FP-1039 in squamous non-small cell lung cancer due to the rise of immuno-oncology therapies from Merck ($MRK), Bristol-Myers Squibb ($BMY) and others, citing a “change in treatment paradigms.”GlaxoSmithKline ($GSK) is cutting ties with Five Prime Therapeutics’ ($FPRX) in-development cancer therapy, backing out in the middle of a mesothelioma trial.

Now GSK is set to abandon a drug it inherited through its $3 billion acquisition of Human Genome Sciences in 2012, leaving Five Prime to go it alone in an ongoing Phase Ib study testing FP-1039 against mesothelioma. Five Prime said it plans to work with GSK to complete enrollment in the study, adding that it “continues to be encouraged” by the drug’s potential in mesothelioma.

Embattled Bay Area XOMA  (XOMA) Terminates Gevokizumab Trials, Slashes Headcount by 50%

3/11/2016 6:39:17 AM

March 11, 2016
By Alex Keown, BioSpace.com Breaking News Staff

BERKELY, Calif. – Troubled XOMA Corp. (XOMA) is terminating half of its workforce after a late-stage failure of its experimental drug gevokizumab for treatment of pyoderma gangrenosum, the San Francisco Business Times reported this morning.

Following the announcement, Xoma’s stock is down this morning about 5 percent, trading at 91 cents per share as of this writing.

Xoma said it is interested in divesting itself of gevokizumab. In a statement, the company said several companies have approached Xoma about acquiring the drug. Gevokizumab binds to interleukin-1 beta (IL-1 beta), a pro-inflammatory cytokine. Xoma said it will make all information about the drug and study information available to potential buyers. Gevokizumab has had a troubled history with Xoma. The company has halted several trials with the drug for various diseases, including diabetes and a blinding eye disease, the Times reported. In 2014, Xoma was forced to stop testing gevokizumab as an arthritis treatment after the drug did not show significant benefit against placebo after a six-month period.

Struggling Eleven Biotherapeutics (EBIO) Gets Delisting Notice from Nasdaq After Back-to-Back Clinical Trial Failures

3/10/2016 6:07:38 AM

March 10, 2016
By Mark Terry, BioSpace.com Breaking News Staff

With one piece of bad news after another, Cambridge, Mass.-based Eleven Biotherapeutics Inc. (EBIO) filed a Form 8-Kwith the U.S. Securities and Exchange Commission, addressed a delisting notification it received from the Nasdaq on Mar. 3.

The Nasdaq informed the company that its stock dropped below $1 a share, and that the stockholder equity didn’t comply with the $5,000,000 minimum stockholders’ equity requirement. As a result, it has 180 days to comply with Nasdaq rules.

On Jan. 10, the company announced that its Phase III clinical trial of EBI-005 (isunakinra) for severe allergic conjunctivitis did not meet its primary endpoint.

In May 2015, the company reported that its drug, EBI-005, for moderate to severe dry eye disease, failed to prevent damage to the cornea or reduce eye pain in comparison to the control group.

In a January statement, Abbie Celniker, president and chief executive officer of Eleven Biotherapeutics, said, “We are disappointed that isunakinra failed to meet its primary endpoint, and based on these overall results we see no immediate path forward in allergic conjunctivitis. Our efforts will be focused on submitting an investigational new drug application (IND) for EBI-031 in diabetic macular edema in the first half of 2016.”

EBI-031 was designed for intravitreal delivery using the company’s AMP-Rx platform. The drug blocks both free IL-6 and IL-6 complexed to the soluble IL-6 receptor (IL-6R). The compound is being developed to treat diabetic macular edema (DME) and uveitis.

DMD Setback Prompts Sarepta (SRPT) to Shutter West Coast Location and Consolidate to Massachusetts, 30 Jobs Gone

3/9/2016 6:13:13 AM

March 9, 2016
By Mark Terry, BioSpace.com Breaking News Staff

Cambridge, Mass.-based Sarepta Therapeutics (SRPTannounced yesterday that it was shuttering its research-and-development manufacturing facility in Corvalis, Ore. Most of the employees there are expected to move to Sarepta’s facilities in Andover and Cambridge, Mass. About 30 people are expected to be laid off.

On Jan. 21, Sarepta announced that, with an impending snowstorm on the east coast, the U.S. Food and Drug Administration (FDA)’s meeting to review the company’s New Drug Application (NDA) for eteplirsen to treat Duchenne Muscular Dystrophy (DMD) was postponed.

DMD is a muscle wasting disease caused by mutations in the dystrophin gene. The disease is progressive and generally causes death in early adulthood. Complications include serious heart or respiratory-related problems. It mostly affects boys, about 1 in every 3,500 to 5,000 male children.

On Jan. 15, an FDA advisory committee decided to reschedule the meeting, at which point a recommendation or approval decision will be made. That meeting of the Peripheral and Central Nervous System Advisory Committee has not been rescheduled yet, but Sarepta believes it will be prior to May 26, which is the PDUFA date. The Prescription Drug User Fee Act (PDUFA) is a law that allows the FDA to collect an application fee from drug companies when an NDA or Biologics License Application (BLA) is submitted.

The DMD drug arena has been fraught with failures and bad news this year. San Rafael, Calif.-based BioMarin Pharmaceutical Inc. (BMRN)’s application for its DMD drug Kyndrisa (drisapersen) was turned down by the FDA on Jan. 15. The FDA argued that Kyndrisa didn’t show enough benefit.

On Jan. 25, Cambridge, Mass.-based Akashi Therapeuticsannounced that it had halted its DMD trial for HT-100 after one of its patients developed serious, life-threatening health problems. In that DMD is a serious, life-threatening health problem in itself, it’s not clear if the patient’s problems are directly related to the drug. The patient was receiving the highest dose in the HALO trial, while others in the trial with lower doses were not showing adverse side effects.

 

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GSK Partners With SG3 Ventures to Add $100 Million to the Pittsburgh Biotech Scene

From Biospace News: Backed by GlaxoSmithKline (GSK), New VC Firm SG3 Ventures Has $100 Million to Bet on Pittsburg Startups

Reporter: Stephen J. Williams, Ph.D.

Source: http://www.biospace.com/News/backed-by-glaxosmithkline-new-vc-firm-sg3-ventures/412039/source=TopBreaking?intcid=homepage-seekernewssection-tabtopbreakingnews

 

Pittsburgh-area entrepreneurs will soon have another funding option for growing early phase startup companies.

Pharmaceutical giant GlaxoSmithKline has thrown its support behind the creation of a $100 million venture capital fund, which will help meet a need for early stage business startup capital in the Pittsburgh area. Philadelphia-based SG3 Ventures anticipates awarding its first round of funding in about a year, according to Brian McVeigh, vice president of worldwide business development transactions and investment management at GSK.

From Pittsburgh Post Gazette: http://www.post-gazette.com/business/healthcare-business/2016/03/11/New-early-stage-venture-fund-forming-with-eye-on-Pittsburgh-startups/stories/201603090016

New early-stage venture fund forming with eye on Pittsburgh startups

Pittsburgh-area entrepreneurs will soon have another funding option for growing early phase startup companies.

Pharmaceutical giant GlaxoSmithKline has thrown its support behind the creation of a $100 million venture capital fund, which will help meet a need for early stage business startup capital in the Pittsburgh area. Philadelphia-based SG3 Ventures anticipates awarding its first round of funding in about a year, according to Brian McVeigh, vice president of worldwide business development transactions and investment management at GSK.

“There is a huge untapped opportunity,” Mr. McVeigh said. “Let’s bring the money here.”

New prescription drug treatments will be a priority for fund investments, but a balanced portfolio including life science technologies is planned.

In the venture ecosystem, insurers, pension funds and other institutions use such funds to invest in promising startup companies — both to balance their portfolios and to get a shot at investment returns that would not otherwise be possible. The venture funds oversee allotting capital to a portfolio of startup companies.

The investment money enables startups to mature and eventually bring in other investors through a public offering or acquisition by a larger company, generating money to repay the initial investors.

GSK and other big pharmaceutical companies are making similar investments to maximize returns and keep their product pipelines full, but GSK has been focusing on earlier stage companies, shifting its focus to pre-clinical technologies about five years ago, Mr. McVeigh said.

In addition, Big Pharma is increasingly relying on outsourced research and development operations, often in collaboration with universities, to fill industry product pipelines. GSK has funded a number of these initiatives, including a cancer collaboration with the University of California, San Diego School of Medicine and Moores Cancer Center.

SG3 Managing Director Keith Marmer said the new venture fund will be committed to technologies developed outside the better known tech hubs of Silicon Valley and Boston-Cambridge.

“We’re here, we’re from here, and we want to be here,” he told a group of entrepreneurs at a recent breakfast meeting in Oakland. “Sustaining technology through research funding isn’t happening anywhere.”

Parsippany N.J.-based GSK closed its consumer health care operations in Moon in 2015, eliminating 274 jobs a year after the company’s merger with Swiss vaccine maker Novartis. Mr. McVeigh works at the company’s offices in King of Prussia, Pa.

With federal research dollars flat in recent years, universities nationwide have been turning to commercialization of intellectual property as a new source of revenue.

At the same time, Pittsburgh’s startup community is showing signs of new life.

Among the signs: Patrick Gallagher’s commitment to the commercialization of faculty research since becoming University of Pittsburgh chancellor 18 months ago, awakening a sleeping giant of economic development and innovation and hospital system UPMC’s creation of a commercial enterprises arm to fund promising technologies.

The timing couldn’t be better for venture capital funds like SG3.

Nationwide, early stage funding has been chasing fewer deals, according to a report by Money Tree, which was compiled by PricewaterhouseCoopers and the National Venture Capital Association based on data provided by Thomson Reuters.

Early stage investments nationally last year totaled $19.8 billion, a 23 percent increase from $16.1 billion in 2014. But the number of deals were essentially flat from the previous year, suggesting that some companies were left out in the cold.

What’s more, the amount of money available to Pittsburgh-area entrepreneurs after the earliest rounds of investment isn’t keeping pace with the innovations coming out of the city’s universities, said Dietrich Stephan, a serial entrepreneur who also chairs the human genetics department at Pitt.

“There’s real substance here,” he said. “Without money, we can’t build.”

Seed investment funding — the earliest level of funding — is not a problem in Pittsburgh, said Buchanan Ingersoll Rooney PC lawyer Jeremy Garvey, who also chairs the Bridgeville-based Pittsburgh Venture Capital Association.

“The predominance of funding in this market comes in the earliest stages,” he said. “Institutional funding is much harder to get in this market.”

Early stage venture funding began drying up with the stock market crash of 2008, which also chilled the financial markets for initial public offerings for biotech companies, Mr. McVeigh said. Eventually, conditions thawed for IPOs, but the lower valuations for new companies than before 2008 made that less attractive than before.

“We’re really energized by the energy there” in Pittsburgh, Mr. McVeigh said. “We’re looking to bring venture capital to the region.”

Kris B. Mamula: kmamula@post-gazette.com

About SG3 Ventures

SG3 Ventures is an early stage life science venture capital firm. Our primary focus in on therapeutics and digital health; however, we will invest opportunistically when presented with a potential vehicle to drive superior returns for our limited partners. We are active in company formation, deploying financial and human resources to help deliver value. In addition, we access deep industry networks to ensure a path to market with strong commercial partnerships built into our companies from the beginning. SG3 prefers to invest in the greater Philadelphia Region (Princeton to the north, Baltimore to the south and Pittsburgh to the west). We prefer to make initial investments at the formation or seed stage with a focus on providing financing through mature rounds of investment.

  • Website

    http://sg3ventures.com

  • Industry

    Financial Services

  • Type

    Partnership

  • Headquarters

    3711 Market Street Suite 800Philadelphia, PA 19104 United States

  • Company Size

    1-10 employees

More articles on the Open Access Journal on Biotech Investing Include

J.P. Morgan 34th Annual Healthcare Conference & Biotech Showcase™ January 11 – 15, 2016 in San Francisco

New Values for Capital Investment in Technology Disruption: Life Sciences Group @Google and the Future of the Rest of the Biotech Industry

Bristol-Myers Squibb: A global BioPharma leader – Tracing the innovative biotech core of $3.7 billion R&D Investment and $16.4 billion in Net Sales

 

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