San Diego’s Trius Therapeutics, like Zogenix and Pacira Pharmaceuticals, was among the local IPOs that got caught in the jaws of the amazing life sciences valuation-shrinking machine of 2010.
Trius initially filed its IPO in late 2009 to raise as much as $86 million by March 2010, so the company could price its shares in time to fund its planned Phase 3 clinical trials of torezolid phosphate, a promising antibiotic for treating acute, methicillin-resistant skin infections. Torezolid is the company’s lead drug candidate, and as Trius CEO Jeff Stein told me recently, the company was working on its IPO and finalizing the protocols for its late-stage clinical trials at roughly the same time.
As fate would have it, though, the FDA decided in late February to change its guidelines for such studies—necessitating a substantial overhaul of the company’s application for a special protocol assessment (SPA). The SPA process is designed to serve as a kind of roadmap for both the company and federal drug regulators, and sets out how data from the trial can be used as the primary basis for a new drug application.
Reaching an agreement on the revised protocols took until mid-June, forcing the company to delay its IPO into what Stein called the summer doldrums. Stein says Trius didn’t want to postpone the IPO any further, as the company needed the capital to fund the planned clinical trials. Trius also is on a tight timeline for launching the new drug, which was tied to other steps in the company’s overall strategy.
“We made the right decision,” Stein said. “The fact that we got it done at all is a testament to the strength of the [torezolid] story, the quality of our management team, and everything else.”
The company paid a price, though, when underwriters chopped the price and increased the number of Trius shares, leading the company to generate about $30 million less than expected in its IPO. Instead of generating close to $80 million, Trius raised a total of $50 million in the offering—prompting the company to re-evaluate its capital-spending plan. “It kind of forced us into the strategy of initiating just one Phase 3 trial,” Stein said.
So, instead of running two late-stage trials of torezolid at the same time, as planned, the company now plans to first assess an oral version of the antibiotic, and then later determine how well patients who begin an intravenous form of the antibiotic can handle the shift to an oral version.
Earlier this year, Trius showed that torezolid also could be highly effective in treating lung infections caused by Staphylococcus and Streptococcus bacteria—opening another potentially lucrative market.
The company might yet seek a strategic partnership with a major pharmaceutical. But Stein said Trius has retained most of its original strategy, which called for funding its late-stage trials of leading drug candidates from the financing tools available to public companies.
To build up the company’s pipeline of future antibiotics, Trius has relied on federal research grants to help identify and develop early stage compounds. In April, for example, Trius said it was getting $3 million over the next three years to work with the Lawrence Livermore National Laboratory to help develop new antibiotics directed against multi-drug resistant (MDR) bacterial pathogens. The project is the company’s second collaboration with the federal lab in Livermore, CA, and is intended to combine Lawrence Livermore’s computational capabilities (and expertise in defending against biological weapons) with Trius’ expertise in structure-based drug design and its antisense screening technology to identify potential new antibiotic compounds.
Much of Trius’ R&D work is focused on so-called gram-negative bacteria, which include microbes responsible for bubonic plague and tularemia as well as common hospital infections. Gram-negative bacteria can be resistant to a variety of standard antibiotics (Stein explained that the microbes are protected by a type of double-cellular wall), and Trius has been searching for ways to kill the bacteria by disrupting cell wall biosynthesis.
Trius first realized the potential for such R&D funding in 2008, when the company entered into a $27.7 million, five-year contract with the National Institute of Allergies and Infectious Disease to help identify and optimize new antibiotics. In 2010, the Pentagon’s Defense Threat Reduction Agency awarded Trius a second $29.5 million contract to use its screening technology to identify more potential antibacterial compounds from natural marine products.
Altogether, the federal grants landed by Trius exceed $60 million, and Stein dryly noted the company has raised more money through its federal grants than from last year’s IPO. But that’s OK, because as Stein put it, “Our job is to create options.”