Private biotech companies are fortunate if they can scrape together a few million bucks in this year’s venture financing drought, but didn’t stop Hayward, CA-based Intarcia Therapeutics from raking in a whopping $210 million to support its drug/device combo treatment for diabetes.
Intarcia, a private company moving its commercial headquarters to the Boston area while keeping R&D in the Bay Area, said today it hauled in that load of cash in two chunks. Part of the money, $160 million, is coming from a sale of preferred stock, while the remaining $50 million is coming as debt. Existing investors such as New Enterprise Associates, New Leaf Venture Partners and Venrock Associates joined the financing, along with new investors such as The Baupost Group, Farallon Capital Management, and three unidentified groups which Intarcia described as “top-tier institutional investors based in Boston and New York.”
Intarcia is led by CEO Kurt Graves, a former commercial executive with Cambridge, MA-based Vertex Pharmaceuticals (NASDAQ: VRTX). The product that attracted him, and which he explained to me in November 2010, is designed to treat one of the world’s biggest and fastest-growing pharmaceutical markets. Intarcia’s product, dubbed ITCA 650, is a matchstick-sized implantable mini pump that is supposed to slowly, steadily secrete a precise amount of the diabetes drug exenatide to help keep blood sugar under control.
More than 25 million people in the U.S. are thought to be diabetic today, and incidence of diabetes and all kinds of associated ailments—blindness, heart attack, stroke—is rising so fast that UnitedHealth Group estimateda couple years ago that it will be responsible for one-tenth of the nation’s healthcare bills by the end of the decade.
Intarcia is hoping that its slow-secreting drug/device combination product will do a better job of keeping blood sugar on an even keel than today’s oral pills and injectable drugs. Those treatments, because of the nature of the way they are absorbed, still allow for peaks and valleys of drug concentration in the blood, which can allow the disease to fester. Intarcia’s bet is that by allowing for a small, steady dose of exenatide to be secreted all the time, it will be able to better manage the disease for patients.
Exenatide was first developed by San Diego-based Amylin Pharmaceuticals as a twice-daily injectable sold as Byetta, and then as a once-weekly injection sold as Bydureon. That program is now owned by a partnership between Bristol-Myers Squibb and AstraZeneca. Graves has said Intarcia has the intellectual property freedom it needs to use exenatide in its own novel delivery mechanism. The drug is part of a class of diabetes treatments that stimulate a receptor on cells called GLP-1.
Bryan Roberts, a partner with Venrock Associates who invested in Intarcia, gave a list of four bullet points when asked what convinced him to make such a big new investment. Here’s what he said:
1. Great leadership in Kurt Graves
2. Great 48-week data on a drug/device combo we have proven we can make at scale
3. Demise of lots of other GLP-1 programs
4. Phase 3 clinical development strategy that has a very high likelihood of showing superiority over other therapies in a huge market.
The new shot of cash will enable Intarcia to enter the third and final phase of clinical trials normally required for regulatory approval in the U.S. and around the world, the company said today in a statement. That Phase III program is expected to start in 2013. The company didn’t describe the size and scope of the program today, or say how long the trials are expected to take.
Intarcia said in today’s statement that the $210 million financing is the largest sum raised by a private biotech company in at least 25 years. But that analysis apparently didn’t include privately held Palo Alto, CA-based Jazz Pharmaceuticals, which raised $250 million for neurological drug programs in March 2004.