West Coast Biotech Roundup: Seragon, Ambrx, Pregenen, and More

7/3/14Follow @bvbigelow

Our nominee for the just-created “Bio Man with the Midas Touch” award goes to Richard Heyman, who co-founded San Diego’s Seragon Pharmaceuticals 11 months ago. Roche’s Genentech unit agreed yesterday to pay over $1.7 billion for Seragon, which has an early-stage drug targeting metastatic breast cancer. Heyman was previously the CEO of San Diego’s Aragon Pharmaceuticals, which was acquired last year by Johnson & Johnson in a deal valued at $1 billion. During his talks with J&J, Heyman negotiated a provision that exempted Aragon’s estrogen-driven cancer technology from the deal—enabling him to quickly restart Seragon with other Aragon executives.

—South San Francisco-based Genentech, the headquarters for Roche’s U.S. pharmaceutical operations, agreed to pay $725 million upfront, and potentially $1 billion more in milestone payments, to acquire San Diego’s Seragon Pharmaceuticals and its breast cancer drug program. Seragon was spun out just 11 months ago by Aragon Pharmaceuticals to clear the way for Aragon’s own deal—a $1 billion acquisition by Johnson & Johnson. The Seragon buyout was a coup for the Column Group, Topspin Partners, Aisling Capital, OrbiMed Advisors, and venBio, the San Francisco firm that has had a remarkable run of noteworthy deals over the past year. Seragon has been advancing so-called selective estrogen receptor degraders, or SERDS, which are supposed to both bind to estrogen receptors and then degrade them, eroding their signaling abilities.

—In other Genentech-related news, ex-Genentecher Stephen Kelsey decided to trek coast to coast and leave San Francisco-based Medivation (NASDAQ: JNJ) to become the new CEO of Cambridge, MA-based Onkaido Therapeutics, the first startup incubated by messenger RNA drug specialist Moderna Therapeutics. Kelsey spent seven years as the executive vice president of Genentech’s oncology portfolio before moving to Menlo Park, CA-based Geron (NASDAQ: GERN) and later Medivation. He’ll now take on Onkaido, which was formed around 15 prospective mRNA programs created within Moderna and is wholly owned by the company.

—San Diego’s Ambrx, a biotech developing bio-conjugates to treat solid tumors and other diseases, withdrew its IPO, citing current market conditions. Ambrx had planned to raise as much as $86 million. The 11-year-old biotech has collaboration agreements with at least six major pharmaceutical companies to develop antibody-drug conjugates.

—Menlo Park, CA-based Avalanche Biotechnologies, a clinical-stage biotech developing gene therapies for treating ophthalmic diseases, hopes to raise as much as $86.2 million in an IPO, according to a regulatory filing. The company says its technology is intended to induce a sustained expression of a therapeutic protein with a one-time administration in the eye. Its lead drug candidate, AVA-101, is targeting wet age-related macular degeneration (AMD).It’s the latest step in a big year for Avalanche, which raised a $55 million Series B round in April and then cut a $640+ million deal with Tarrytown, NY-based Regeneron Pharmaceuticals (NASDAQ: REGN) a month later to co-develop and commercialize gene therapies for eye diseases. Regeneron, which owns 9.1 percent of Avalanche, can negotiate for rights to AVA-101 after Avalanche completes a Phase 2a study. Data from that trial are expected in mid-2015.

—San Diego-based Viking Therapeutics, a biotech founded two years ago to develop treatments for diabetes and other metabolic and endocrine disorders, plans to raise as much as $57.5 million in an IPO, according to a recent regulatory filing. Viking has five drug candidates based on small molecules licensed from Ligand Pharmaceuticals. The most advanced of the group is an oral treatment in mid-stage trials for Type 2 diabetes. Founder and CEO Brian Lian holds a 61 percent stake in Viking; COO Michael Dinerman has 26 percent.

—Cambridge, MA-based Bluebird Bio (NASDSAQ: BLUE) has been flying high since it released some encouraging results for one of its gene therapies a few weeks ago. Capitalizing on its improved fortunes, Bluebird said it has acquired a privately held Seattle-based gene editing startup called Precision Genome Engineering (Pregenen), to help expand the types of gene therapy products it can offer. Bluebird is issuing Pregenen stockholders 408,667 shares of its stock and paying off $4.9 million of Pregenen’s debt. The Seattle company’s shareholders also could eventually get about $135 million in payouts tied to various development and commercial milestones if things break right.

—San Diego’s BioNano Genomics has raised just over $5 million in a planned $6.1 million financing that includes debt and rights to acquire securities, according to a recent regulatory filing. BioNano has been developing gene-sequencing technology that unravels DNA into much longer strands than conventional gene sequencing technology. The company raised $10 million in venture funding last fall.

—Point Richmond, CA-based Transcept Pharmaceuticals (NASDAQ: TSPT) this week turned from an insomnia pill developer to an antibiotics company by agreeing to merge with Paratek Pharmaceuticals. The combined company will be called Paratek and focus its efforts on the late-stage antibiotic, omadacycline. Paratek shareholders swapped their shares for 89.6 percent of Transcept’s stock, with existing Transcept holders getting the remaining 10.4 percent. As part of the deal, a group of new investors like the Baupost Group teamed with Paratek and Transcept shareholders to invest $93 million into the combined company. Transcept’s insomnia drug, zolpidem (Intermezzo), hasn’t held up well in a market full of cheap competition, leading the company to field offers. Transcept’s management will resign as part of the deal.

—A two-year-old Boston startup developing a new class of drugs for treating life-threatening fungal infections has moved to San Diego and changed its name to Cidara Therapeutics in a restructuring that includes $32 million in Series A financing. Former Trius Therapeutics CEO Jeff Stein has joined the company, which hopes to boost a patient’s ability to fight fungal infections by tagging fungi with bacterial molecules that stimulate an immune response.

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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