By Brian Gormley
Of DOW JONES VENTUREWIRE
When Cubist Pharmaceuticals Inc. (CBST) bought Calixa
Therapeutics Inc. last week, it marked the third time in the last
four years that an antibiotics start-up funded by Canaan Partners
and Domain Associates had been sold.
Canaan and Domain were also among the investors in Peninsula
Pharmaceuticals Inc., acquired by Johnson & Johnson (JNJ) in
2005, and Peninsula spinout Cerexa Inc., which merged with Forest
Laboratories Inc. (FRX) in 2007. Investors at the two firms,
working with other, like-minded venture capital firms, made several
good moves along the way to drive the companies to success.
In the 1990s, pharmaceutical companies pulled away from
antibiotics in favor of other markets, such as medicines for large,
chronic conditions. But the problem of antibiotic resistance
wouldn't go away just because drug makers had, something Canaan,
Domain and other firms recognized early this decade.
In response they started Peninsula Pharmaceuticals to develop
drugs for life-threatening infections. Peninsula licensed
doripenem, a treatment for serious conditions in hospitalized
patients, and a cephalosporin antibiotic aimed at a broad spectrum
of pathogens, including the hospital bug methicillin-resistant
Staphylococcus aureus.
Peninsula's success in demonstrating doripenem's clinical
potential led to its $245 million merger with Johnson &
Johnson, which wasn't interested in the company's cephalosporin.
That drug became the basis for Cerexa, whose backers also included
Peninsula investors Pappas Ventures and Montreux Equity
Partners.
While developing this therapy, Cerexa added an arm to its Phase
II study in which it compared the product to vancomycin, an
antibiotic hospitals use when others have failed. Though not
powered to show superiority over vancomycin, the encouraging
results of that study gave acquirers one more reason to believe
Cerexa's drug would succeed, said Canaan General Partner Brent
Ahrens. Forest bought Cerexa for just under $500 million in January
2007.
That same year, Canaan, Domain and Frazier Healthcare Ventures
launched Calixa around an Astellas Pharma Inc. (ALPMY, 4503.TO)
drug Cerexa considered but never acquired. The drug, CXA-101,
targeted Gram-negative bacterial infections, which have emerged as
an increasingly serious problem. Though CXA-101 is potent on its
own, Calixa elected to combine the drug with a generic antibiotic,
tazobactam--which is also part of the marketed anti-infective,
Zosyn--to give it broader activity.
The opportunity to obtain such a drug candidate enticed Cubist
to pledge $92.5 million up front, plus $310 million in milestones,
for Calixa.
Canaan and Domain, which have invested together in several other
deals as well, share many views on how to build biotechnology
companies, said Ahrens. Peninsula, Cerexa and Calixa ran lean
operations early on to minimize expenses. Another plus was
continuity in management of the three companies, since Dennis
Podlesak, now a Domain partner, served as chief executive of each
one. "Not that we don't disagree on some things, but there's a lot
of similarities about how we go about running our businesses,"
Ahrens said.
The firms are now teaming up with Aisling Capital, New Leaf
Venture Partners and Sofinnova Ventures to spin the former Pfizer
Inc. (PFE) antibiotics subsidiary Vicuron Pharmaceuticals out into
a new company, Durata Therapeutics Inc., which aims to propel the
injectable antibiotic dalbavancin to U.S. approval.
While Peninsula, Cerexa and Calixa were developing earlier-stage
assets, Durata plans to begin testing dalbavancin in Phase III
studies in late 2010. And whereas those companies were acquired
before their products completed Phase III studies, Durata's fate
hinges on the success of dalbavancin in the upcoming trials.
Part of the appeal of antibiotics, however, is that early
studies are predictive of future clinical results. Peninsula's
doripenem, for instance, has gone on to earn U.S. approval. In
dalbavancin, venture firms are getting a product that has generated
Phase III data in acute infections of the skin and skin structures,
and one that has been in more than 1,000 patients.
There is potential that dalbavancin, which could be dosed once
weekly, will enable patients who would now be hospitalized to
receive daily intravenous antibiotic infusions to go home. That
would make it easier for patients to comply with their antibiotic
regimen, said Domain Partner Nicole Vitullo.
Domain and Canaan continue to consider new investments in
antibiotics, which are a good fit for small companies because the
regulatory pathway is straightforward and clinical studies
relatively inexpensive. "We find the anti-infective area feels very
comfortable from the venture point of view," Vitullo said.
(Dow Jones VentureWire covers news about venture-capital
investing and start-up companies.)
-By Brian Gormley, Dow Jones VentureWire; 617-823-8723