UPDATED: Evotec evolves as it announces first-ever spinoff and new business model

CEO Werner Lanthaler--Courtesy Evotec

German firm Evotec has spun off its first drug unit as it looks to start a new era in its business strategy.

The Hamburg-based company, which runs CRO-like services alongside drug discovery projects, has named the new early-stage firm Topas Therapeutics GmbH, which is an abbreviated form of "tolerizing particles"--the main process behind the new firm's platform.

Topas, which will also be based in Germany, will specialize in the field of nanoparticle-based therapeutics to treat immunological disorders.

The new company starts life with a €14 million ($15.7 million) Series A funding injection from Evotec (which also holds a major equity stake in Topas), as well as from Epidarex Capital, EMBL Ventures and Gimv. It emerges from the neuro portfolio of Bionamics GmbH, which was acquired by Evotec back in 2014.

Topas' lead program is in multiple sclerosis (which it believes could prove disease-modifying and therefore very lucrative) and is set to enter the clinic in 2017.

The drug will be developed by its proprietary liver-based tolerance induction platform--a platform exclusively licensed from the University Medical Center Hamburg-Eppendorf, where it was invented by Johannes Herkel, Jörg Heeren and other colleagues in Hamburg.

In a statement, Evotec said its spinoff intends to develop its MS program through to proof-of-concept, after which licensing partners will be sought.

Topas has been billed as Evotec's first spinoff and as a new model for the company--although ten years ago it did in fact raise €25 million for Evotec Neurosciences (ENS), a unit the company called a "subsidiary" but looked and felt a lot like a spinoff. Whatever it may have been, it was shortly re-bought and subsumed back into Evotec. 

Evotec says that there is a potential for further spinoffs "as this is an additional tool that fits very well" as an extension to its EVT Innovate program--a network of academia, pharma and biotech that links on drug discovery.

This network will likely prove very helpful when developing new funding streams for Topas in the future.

The Bionamics deal and the creation of EVT Innovate was the beginning of a change in Evotec's business model, which had historically focused on risk-splitting projects with Big Pharma sponsors, in which the company often handles development of an external candidate in exchange for CRO fees and a cut of future profits.

That model has attracted partners including Bayer, Boehringer Ingelheim and Johnson & Johnson ($JNJ), but with this new spinoff, the company is expanding to include a more bottom-up approach to drug development.

Topas will be led by Dr. Timm Jessen, who was formerly MD of Bionamics and served as the CEO of Evotec for 7 years.

Dr. Werner Lanthaler, CEO of Evotec and interim chairman of the supervisory board of Topas, told FierceBiotech the spinoff was part of an evolution of his company (which he points out is short for "evolutionary biotechnology") and has been incubated for the past three years after its purchase of Bionamics and the growth of EVT Innovate.

"Topas specifically has required a new type of thinking to be created, and this has come from our Innovate project and our other programs. We have been breeding Topas, together with the three founders of Bionamics, over the last 2-3 years. Now, we're looking at a clinical entry for 2017 [for its lead MS candidate]--this of course has not happened over night, but is a result of an integration into the Evotec business model over the past few years."

Its lead drug has been under preclinical testing but there is a big jump to human trials--it also has the added pressure of being the great white hope for the entire Topas company. Lanthaler, however, believes the drug will perform: "For Topas to come into existence, it needed to convince us that its platform could produce good data, otherwise it never would have happened.

"We know of course that the MS market is not competitive-free, and to even think about starting something like this you need to know you have better data than what's already out there. The platform is very well tailored towards this drug and other targets and is a very elegant way of going into the liver and producing the best results."

But Evotec is of course not the only company putting in money as it has gained funding from external sources. "We know this is a high risk area which is why it was prudent to not only take Evotec money but also an investment consortium to take things forward," Lanthaler explained. "This gives us an optimal risk-reward profile."

He said that future spinoffs have not been confirmed, but is open to the idea of more as part of its evolving business model. "We don't commit ourselves to 'X' number of spinoffs in the future--that would be stupid--but just creating the format and the concept opens up the possibility of other firms to talk to us. And of course doing this can also help us leverage our platforms with external money."

Topas will be led by Dr. Timm Jessen, who was formerly MD of Bionamics and served as the CEO of Evotec for 7 years.

Lanthaler said Jessen's return to the company was one of the reasons why Topas could be launched: "Here with Jessen we have a guy who knows our platforms and our systems, and who I recruited back to Evotec [after the 2014 Bionamics buy]. You want someone like that to run things when you're spinning off a company."

Meanwhile, the company also announced its financial results for the year today, with group revenue growth of 43% to €127.7 million, with adjusted group EBITDA in 2015 amounting to €8.7 million. Lanthaler said of the results that "We are on full speed and have great traction."

- read the release

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