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very small pool of shareholders, and Thacher says that makes comparisons with other ROR-γt partnerships problematic.
“We can get an earlier partnership, that is financially meaningful because we haven’t put as much money into it,” Thacher says. “It gave us credibility, it gave us cash… and we got a frontline seat to an experienced organization doing drug discovery of its own.” An important consideration in their deal was Japan Tobacco’s chemistry expertise and commitment to advancing the targets.
With the contract signed, Thacher expanded Orphagen’s team to nine and channeled new energy into developing compounds for other orphan nuclear receptors. Venture Capital or angel investment could have taken the ROR-γt compounds to a more profitable stage for licensing, but he says the resources would have been attached to that program, which meant their other candidates would have languished.
In the meantime, Thacher says Orphagen remains open to the possibility of VC or angel investment; “you have to be opportunistic.” The company is currently interested in a deal or partnership to advance their next drug candidate, a potential treatment for retinitis pigmentosa, the inherited, degenerative eye disease. Their molecules bind with an orphan nuclear receptor involved, down-regulating activity of the mutant genes responsible for one form of the disease. Orphagen has funneled cash and resources from the deal with Japan Tobacco into their secondary compounds. “With another $3 million, we should be able to get well beyond the major partnership-generating milestones,” Thacher says. This drug, and another in development for Cushing’s syndrome, also qualify as “orphan diseases,” and are eligible for certain federal incentives.
Orphagen could not have gotten started without government grants, and Thacher believes more should be done, given the economic boost new start-ups can add to the discovery ecosystem. Thacher believes in grants so strongly, in fact, that he is proposing a state asset fund for California, awarding grants for small companies to support early stage research, modeled on the SBIR program that has been successful at the Federal level. States such as Pennsylvania, Massachusetts, and Connecticut already have programs in place, and Thacher believes California state program would help San Diego thrive, where such technology and entrepreneurial expertise is abundant.
In the end, though, Orphagen’s exit strategy remains uncertain. Their small business model, is “scalable,” Thacher says, “but not rapidly scalable,” and growing for the sake of growth does not appeal to him. He says it would compromise their inventive advantage.
In the meantime, Thacher represents the biggest survival factor for the company— combining entrepreneurship, scientific skill, and the ability to make-do with the variable resources on hand. Through his leadership, Orphagen has shown that small biotech companies can punch above their weight, though on a smaller scale that rarely makes the news. Perhaps more importantly, Orphagen has potentially discovered some novel drug candidates, which is hugely valuable for the pharmaceutical pipeline.