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to operate through 2011, although it will take even longer than that to get CAL-101 through the FDA application process and cleared for sale on the U.S. market, Gallagher says. Calistoga’s goal is to get the drug on the market by 2013, she says.
If Calistoga wants to take the drug that far, though, it will need more financing. The company, partly through its new connection to a Wall Street player like Quogue Capital, is starting to lay the groundwork for a future IPO, Gallagher says. Calistoga could also opt to form a partnership with a big drugmaker to finish the most expensive phase of drug development. The company has generated a lot of interest in its programs from prospective partners, although it hasn’t yet signed on the dotted line. By fattening up its balance sheet with more venture capital, Calistoga hopes that it has strengthened its negotiating position, essentially showing Big Pharma companies that it can afford to walk away from the bargaining table if it doesn’t like the terms of a potential deal.
“We want to come to partnership talks from a position of strength,” says CEO Carol Gallagher. “By raising this round, we will continue to have control and be able to advance the program. We have a great team here, and we’ve demonstrated we can generate value.”
Staying independent means Calistoga will need to get a lot of productivity out of its existing team. The company has 21 employees at the moment, and only expects to do some modest hiring, growing to about 29 people by the end of 2010, Gallagher says. She plans to add an executive vice president of R&D with experience in cancer drug development, a chief financial officer, and some more talent in clinical development and regulatory affairs.
If Calistoga is getting dressed up for a sale, it clearly wants this to be a big deal, and not just a one-trick pony story. Earlier this year, the company started a trial of CAL-101 in combination with other cancer drugs, including Roche and Biogen Idec’s rituximab (Rituxan), which could help keep investors interested in the company with fresh data releases while they wait for results from the pivotal CAL-101 program. Calistoga also now has the money to start a mid-stage trial to test whether CAL-263, a different molecule that blocks PI3K, has potential against inflammatory diseases, such as rheumatoid arthritis or asthma, Gallagher says.
The second drug still has a lot to prove, but if it can pass the next trial being designed now, then Calistoga will certainly be worth a lot more than if it were perceived as a single product company. Single product companies, if they are successful, often get acquired by bigger companies. That outcome may be in the cards for Calistoga someday, but Gallagher sounds like she’s not ready to sell anytime soon—at least not with such a promising drug on the horizon.
“We’ve shown we can deliver, and we’ve got a great group of experienced people,” Gallagher says. The company could carry CAL-101 through the FDA application process, and introduce the drug into the marketplace, she says. Calistoga’s lead compound, Gallagher says, “is a rare opportunity.”
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