AstraZeneca Nabs Redwood City-based Pearl Therapeutics For Up to $1.15B
Pearl Therapeutics’ investors are a happy group today.
AstraZeneca (NYSE: AZN), the British pharmaceutical giant, has agreed to pay $560 million up front for all of Pearl’s stock. Pearl and its investors could ultimately make more than double that amount, however. AstraZeneca could pay Pearl another $450 million should it hit certain milestones tied to development or regulatory approval, and another $140 million if the drugs meet certain unspecified sales targets. All told, the deal could be worth $1.15 billion if all of those things pan out.
That adds up to good returns for Pearl’s investors, which include Vatera Healthcare Partners, Clarus Ventures, New Leaf Ventures, and 5AM Ventures. The group has helped Pearl raise a total of $167.5 million in financing since 2007, and most recently a $69 million Series D round in November.
“Big day for us,” says Pearl CEO Chuck Bramlage.
Indeed, the deal couldn’t come at a better time for Pearl or its investors. Just weeks ago, on May 13, Pearl began a late-stage clinical trial for its lead drug, PT003, a treatment for chronic obstructive pulmonary disease, or COPD—an umbrella term for lung diseases such as emphysema and chronic bronchitis.
Bramlage says that the company was looking at several ways to get the cash together to fund the trial before AstraZeneca stepped in. Pearl talked to strategic partners, others looking at regional licensing deals, and even investors in a potential Series E round before the deal came together.
“Really they came to us recently and said they were very interested,” he says. “It got very heated very quickly and they did their due diligence very fast, and here we are.”
That’s good news for Pearl, because it now has the financial muscle of AstraZeneca behind it to move that study along. So far, Pearl has enrolled 59 patients in a 2,700-patient, 260-test-site, late-stage study of PT003 and hopes to complete enrollment in about six months and submit a new drug application to the FDA in 2015, according to Bramlage. While AstraZeneca will now bankroll the study, it will keep the Pearl team together to oversee it, he says.
“They’re very interested in keeping things moving and obviously I was pleased to hear that,” Bramlage says. “Their initial comments [to us] were they want to keep us going as fast as we can doing what we do.”
The field for COPD treatments is very crowded, and AstraZeneca knows it well: it’s made billions off of drugs such as budesonide (Pulmicort), an inhalable glucocorticosteroid, and formoterol (Oxis), a long-acting beta agonist, or LABA.
Pearl’s draw is that it is creating a simple inhalable formulation of two drugs—glycopyrrolate (a long-acting muscarinic antagonist) and formoterol—that have two different ways to clear up constricted airways. The formulation, PT003, is what’s known as a LAMA/LABA combination, an emerging class of treatments for COPD. Other big powerhouse pharmaceutical companies such as GlaxoSmithKline, Novartis, and Boehringer Ingelheim, are already developing LAMA/LABA inhalers, and all of them could beat Pearl’s drug to market. Pearl, however, believes that PT003 differentiates itself in two ways: first, that it is administered with stable metered inhalers instead of dry powder inhalers, which are harder for patients to use; and second, that a twice-daily dose at critical times will work better than the once-daily regimen others such as GSK/Theravance.
“The second half of the day you get your second breathing-function improvement, and I know these patients would like to have that additional benefit in the second half of the day,” Bramlage says.
Pearl has to prove this in its clinical trial, of course, or a lot of those potential deal dollars will never materialize.
Pearl also has a product behind PT003 that AstraZeneca is interested in: a drug that adds an inhaled glucocorticosteroid to the two components that make up PT003. Bramlage says AstraZeneca and Pearl will move that into clinical trials once the deal closes.