Elixir Raises $12 Million, Says Drug Trial Could Lead to Novartis Purchase
Two major pieces of news from Elixir Pharmaceuticals today: first, the Cambridge, MA-based drug maker has just completed a $12 million round of equity financing led by MPM Capital, which joins current investors ARCH Venture Partners, Oxford Bioscience Partners, the Omega Fund and Physic Ventures. Kenneth Greenberg from MPM Capital will join Elixir’s Board of Directors.
Second, and potentially far more important, Elixir has granted Swiss drug giant Novartis the option to acquire the entire company following the completion of Phase IIa clinical studies of an oral diabetes drug Elixir has been developing. The drug, a “ghrelin antagonist,” interacts with hormones that regulate appetite and glucose and lipid levels in the body. If the drug turns out to be an effective way to control Type 2 diabetes, the Elixir compound could become an important asset for Novartis, which withdrew its application for FDA approval of its last big diabetes drug, vildagliptin (Galvus), last summer.
A sale of the company to Novartis could also provide a nice ending for Elixir, which has weathered unexpected difficulties since its creation in 1999. Founded by MIT biologist Leonard Guarente, the company focused for many years on researching drugs that might extend lifespan and treat metabolic diseases by manipulating a gene called Sir2. But a strong competitor emerged on the Sir2 front in the form of Cambridge, MA-based Sirtris, and Elixir’s main commercial focus gradually shifted to a pair of diabetes drugs, mitiglinide (Glinsuna) and metiglinide with metformin (Metgluna), that it licensed from a Japanese manufacturer and that may be submitted for FDA approval this year. Guarente left Elixir in 2006 and eventually joined Sirtris (which went on to be acquired by GlaxoSmithKline).
To fuel its ongoing diabetes research, Elixir hoped to raise $86 million in a planned initial public offering announced in late 2007. But the IPO was postponed in January 2008 and canceled in May 2008 in response to unpromising market conditions.
Now Elixir and its investors have another shot at an exit. The Novartis purchase option will kick in if the company can show the worth of its new ghrelin blocker in the Phase IIa clinical trial. At that point, a planned initial payment and additional milestone payments based on regulatory and sales milestones could bring Elixir more than $500 million, the company said in its announcement.