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West Coast Bio Roundup: Shkreli, BlackThorn, Unhappy Holiday Layoffs

Xconomy San Francisco — 

As welcome rain falls on the West Coast, with snow farther east in our mountains, we wrap the year with—what else?—more Martin Shkreli-related drama at KaloBios Pharmaceuticals, which was about to go belly-up a month ago when he swooped in to buy a majority stake. With Shkreli gone, KaloBios is headed south again.

Bad news during the holidays is never good, especially when it’s a pink slip. Two Bay Area companies, StemCells and Threshold Pharmaceuticals, put lumps of coal in workers’ stockings this past week.

Also in the Bay Area, Xconomy reported yesterday that BlackThorn Therapeutics, which has been leaving hints about its existence for some time now, could emerge from semi-stealth soon. Officials declined to comment, but we pieced together some intriguing details about the neuroscience drug developer nonetheless.

Let’s get to the wet, windy roundup.

—KaloBios (NASDAQ: KBIO) revealed in a filing late Wednesday that its stock is about to be delisted by Nasdaq. The company also said that interim CFO Christopher Thorn, a Shkreli associate, had resigned, along with the firm’s outside accountants. Nasdaq sent its warning letter Dec. 18—five days before KaloBios notified shareholders—and cited the arrests of Martin Shkreli and Evan Greebel on fraud charges as one reason. (Both have pleaded not guilty.) Shkreli led an investor group that bought a controlling stake in KaloBios in November and named Greebel outside counsel. Both were fired Monday. KaloBios has until Dec. 28 to appeal. If it does not appeal, its stock will be delisted on Dec. 30.

—Xconomy reported that BlackThorn Therapeutics, pursuing treatments for neurodevelopmental disorders, has quietly built a management team and secured Arch Venture Partners as a key investor. Yet to make an official launch, the company was spun out of the Scripps Research Institute in 2013. Scripps has a broad research program in neuroscience and mental illness. It’s not yet clear which disorders BlackThorn is aiming to treat first, and officials declined to comment.

—StemCells (NASDAQ: STEM) of Newark, CA, announced a restructuring Wednesday and layoffs of a quarter of its workforce. The firm will shelve its macular degeneration program and focus on its Phase 2 spinal cord injury treatment, which it hopes to complete next year. The firm has been entangled in unseemly conflicts of interest with CIRM, California’s stem cell funding agency. Days after former CIRM director Alan Trounson left the agency in 2014, he took a StemCells board seat. CIRM eventually terminated part of the funding award that Trounson had overseen. The episode is one reason Trounson’s replacement Randy Mills has pushed for an overhaul of CIRM.

—More unhappy holidays for Bay Area biotech workers: Last Friday, Threshold Pharmaceuticals of South San Francisco said it would cut staff by about two thirds, trimming the company down to 20 or 25 employees. The layoffs come two weeks after Threshold reported that its lead drug evofosfamide failed two Phase 3 studies. The company will now focus its efforts on its Phase 2 cancer treatment tarloxotinib.

—Halozyme Therapeutics (NASDAQ: HALO) of San Diego signed a licensing deal with Eli Lilly (NYSE: LLY) that brings in $25 million immediately and up to $800 million more if Lilly has success with five drug programs based on Halozyme’s drug delivery technology.

—San Diego’s Effector Therapeutics said it has reeled in $40 million in Series B funding, led by Altitude Life Science Ventures, to help test its lead drug eFT508 in Phase 1/2 trials against solid tumors and lymphoma, and to advance a second compound into the clinic. The cash builds upon the $45 million Effector raised in 2013.

—The spinout of Emergent BioSolutions’ oncology group, announced earlier this year, now has a name. Aptevo Therapeutics will debut next year in Seattle with publicly traded stock and a pipeline that has its roots in Trubion Pharmaceuticals, which Gaithersburg, MD-based Emergent (NYSE: EBS) bought five years ago. Emergent CEO Daniel Abdun-Nabi told the Seattle Times that Aptevo will debut with 70 to 90 employees in Seattle and Eli Lilly veteran Marvin White as CEO.

—Adamas Pharmaceuticals (NASDAQ: ADMS) of Emeryville, CA, said Wednesday a Phase 3 trial for ADS-5102, which treats a side effect of levadopa therapy in Parkinson’s disease patients, met its primary endpoint.

—Exelixis (NASDAQ: EXEL) has asked the FDA for a speedy review of cabozantinib to treat advanced kidney cancer. The drug is already approved in U.S. to treat a rare form of thyroid cancer. An approval in the much larger kidney indication would mark a second victory for Exelixis since it cut 70 percent of staff in 2014 and make for a remarkable comeback. Last month, the FDA approved cobimetinib (Cotellic) for advanced melanoma. Roche’s Genentech division owns most of the cobimetinib rights.

Powell Street cable car photo courtesy of euphro.