Amira Pharma on How it Beat the Odds, and Sold an Early Stage Drug to Bristol-Myers for $325M

9/7/11Follow @xconomy

Amira Pharmaceuticals CEO Bob Baltera has gotten lots of questions lately from his fellow biotech entrepreneurs, which all basically go something like this:

“How did you do that?”

Baltera has certainly had a lot to talk about since late July when Amira agreed to be acquired by New York-based Bristol-Myers Squibb (NYSE: BMY) for $325 million in upfront cash, plus $150 million in future milestone payments. This is one of those rare stories in which a startup drug developer and its shareholders were richly rewarded for bringing an experimental drug through the first of three phases of clinical trials—leaving plenty of risky hurdles left to clear. Other big acquisitions this year in biotech—Berkeley, CA-based Plexxikon, Woburn, MA-based BioVex, and Seattle-based Calistoga Pharmaceuticals—went much further along in development before getting their paydays. Even so, the company’s VCs—Versant Ventures, Prospect Venture Partners, Avalon Ventures, Novo A/S—made a more than 10-fold return on their Amira investment on the upfront cash payment from Bristol alone. Amira raised only about $28 million in venture capital since it was founded in 2005.

It’s an unusual story in biotech drug development, given that only one out of 10 drugs makes it through clinical trials, and the whole process tends to take truckloads of money and excruciatingly long timelines. Knowing all that, Big Pharma companies have often been reluctant to write big checks at such an early stage for programs like Amira’s.

But as lucrative and unusual as the Amira deal might seem at first glance, it’s even more favorable to the company than was reported in the initial July 21 press release. It turns out that Amira and its investors only agreed to sell its drug development program that inhibits a biological pathway known as LPA1. The program includes Amira’s lead drug candidate AM152 and some backups, which are thought to have promise against pulmonary fibrosis, systemic sclerosis, and scleroderma. But Amira and its shareholders were able to retain Amira’s ownership rights to two other drug development programs in the works—one against a pathway known as FLAP, and another called DP2. So the former Amira has set up a couple of independent companies, established as limited liability corporations (LLCs), which will continue to hold equity in those drug programs as they advance through development. The DP2 company is being called Panmira, while the other one still just has the placeholder name—FLAP LLC.

Bob Baltera

If either of those programs pan out, then Amira’s founding executives and investors could get a second set of windfall payments.

“As an investor, this is a dream scenario,” says Brad Bolzon, a managing director of Menlo Park, CA-based Versant Ventures, and Amira’s chairman.

Baltera and Bolzon chalk this one up to a combination of really rigorous science, one particularly hard-nosed business decision, and some excellent timing.

To recap, Amira’s lead drug candidate is for pulmonary fibrosis, a disease that’s best-known for damaging and scarring the lungs of first responders to the 9/11 terrorist attacks. There isn’t currently an effective FDA-approved treatment. The disease makes it hard for people to breathe and ultimately kills an estimated 40,000 people a year. While this is a relatively rare disease, Baltera has noted this is a “grievous illness,” which really means anybody who comes up with a good drug could probably command a high price, and end up with a pretty sizable market opportunity.

Amira’s founding scientists certainly know a lot about diseases of the lungs. Peppi Prasit, Jilly Evans and John Hutchinson were part of the team at Merck that developed … Next Page »

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