Glyn Edwards, CEO of British biotech firm Antisoma, has found just the tonic for both the particularly gloomy weather in London this year and the business risk his company once faced with only one experimental drug close to market approval: Cambridge, MA, drug developer Xanthus Pharmaceuticals.
Xanthus, which Antisoma (LON:ASM) acquired in May for $52.2 million in Antisoma stock, provides Antisoma with two more prime commercial drug candidates. Now Edwards—who notes that one perk of the deal is the sunnier weather he enjoys during regular trips to this side of the Atlantic—plans to begin building a commercial team in Cambridge with a first hire later this year, in anticipation of hoped-for approvals of his firm’s anti-cancer treatments over the next several years. He also talked to me about how Antisoma first walked away from merger talks with Xanthus in 2007, but returned to the negotiating table after privately held Xanthus later reached two key milestones.
“Obviously, drug-development is a risky business; you can’t predict with absolute certainty what the results of these trials will be,” Edwards says, “but we have a high probability that at least one of these drugs is going to get through its Phase III.”
When M&A talks began between Antisoma and Xanthus last year, Antisoma’s only late-stage commercial drug prospect was its lead product candidate, called ASA404, which is in Phase III clinical trials to treat non-small cell lung cancer. (Swiss drug giant Novartis (NYSE:NVS) has licensed exclusive rights to ASA404, but Antisoma retains the option to become Novartis’ U.S. commercialization partner for the drug.) Now, with Xanthus’ pipeline in the Antisoma fold, the British biotech has added AS1413 (formerly Xanafide), which is in Phase III trials to treat secondary acute myeloid leukemia (AML), and oral fludarabine, which is pending FDA review and which could be approved by early 2009 as a secondary treatment for chronic lymphocytic leukemia. (For you science-minded folks, Antisoma gives details on the mechanisms of action of each drug here.)
Xanthus also gave Antisoma a ready-made drug development organization in the U.S., with internal expertise to manage the late-stage clinical trials and earlier-stage work on drugs in its pipeline. Antisoma has retained most Xanthus employees. For example, Mike Boss, who was chief business officer of Xanthus prior to the acquisition, has become general manager of the firm’s autoimmune program. Yet Richard Dean, former CEO of Xanthus, left the company shortly after the buyout. Antisoma has also folded an operation it launched in Princeton, NJ, last year into the 30-person Cambridge office, Edwards says. Though most of the firm’s workers, about 90 employees, are now housed in its London office, the CEO says he foresees the Cambridge outpost employing an equal number of people within the next several years. (Novartis projects potential approval of AS1413 in the U.S. by 2011, he says, and Antisoma would like to build a sales force here by then to handle its part of the joint-commercial effort for that drug.)
Though I hadn’t heard or read this before, Xanthus had been running a dual effort last year to consider whether to seek an initial public offering or find a buyer of the firm. Antisoma, searching at the time for a deal to bring it more late-stage product candidates, entered initial buyout talks with Xanthus yet walked away because the FDA had not yet accepted the New Drug Application for oral fludarabine or cleared secondary AML as an indication for the Phase III trial of ASA1413. But the regulatory agency later accepted both the NDA and the secondary AML indication. “So we got back in touch with (Xanthus) once we saw that both these events had happened,” Edwards says, “and we said, ‘You were right and we were wrong. How about getting married?'”
As Antisoma details in its announcement of the May 2008 acquisition, Xanthus shareholders—including such Boston-area venture capital firms as Oxford Bioscience Partners, HealthCare Ventures, and Still River Funds—exchanged their Xanthus shares for Antisoma stock. Michael Lytton, a general partner at Oxford who represented the VC firm in the deal, says that Xanthus investors decided after testing the IPO and M&A waters that they could get the best returns on their investments by converting theirs shares into stock in a consolidator in the field of oncology, which turned out to be Antisoma. Lytton says his firm maintains a 4-5 percent stake in Antisoma, and plans to sell its stock once its price (which was 43 cents on September 4) triples in value.
“We see ourselves being shareholders for a couple of years,” Lytton says, “through the point where Antisoma becomes a commercial organization.”