J&J stays mum about cash, but biotech buyout is a landmark win for Index fund

Anticoagulants like warfarin and the new generation that recently succeeded it play a big role in preventing blood clots, a common killer that spurs heart attacks and strokes. But they're also known for causing bleeding, sometimes severe, that also threatens patients. J&J ($JNJ), though, believes it may have the answer in a new anticoagulant program that was spun out of a Cambridge University research group in the U.K. and seeded in a new biotech that Index Ventures grew up under a $200 million fund that was backed in a big way by J&J and GlaxoSmithKline ($GSK) three years ago.

The biotech is XO1, which J&J has snapped up for an undisclosed sum. It's a single-asset biotech offering a second-generation antithrombin to J&J's Xarelto. And it's the first to be sold off from a portfolio of 16 molecules that Index Ventures put together after assembling one of the original "asset-centric" funds.

There's no money to discuss in this story, not even a deal structure. J&J, like a lot of Big Pharmas, typically doesn't like to get into the details about the cash or milestones or royalties that may go into a preclinical acquisition like this. And they're not even hinting about the package.

So what is the big deal here?

Francesco De Rubertis

Even without a number, the buyout marks a landmark event for Index, which set out to prove that you can create real value with solid preclinical development work and cash in on the winners for investors. The Index fund--like other asset-centric vehicles on the other side of the Atlantic--was set up to help lure wary investors back into the world of early-stage development, offering a thrifty way to investigate a promising therapy in a company structure designed to make it easy to sell off at a strong multiple. And Francesco De Rubertis, a scientist-come-partner at Index, sincerely wants you to understand that the payback on this program helps justify that belief, even if he can't discuss the number of dollars that is coming from J&J as an upside.

"We are happy," says De Rubertis. "It is an important preclinical deal, and it really benchmarks favorably. … We want to attract more capital. It's important to demonstrate that it's a viable business model."

This first buyout--shepherded by J&J Innovation's London group, run by Patrick Verheyen--comes for a remarkable antibody that Index says drew several prospective buyers to the table.

XO1 attracted an $11 million A round in 2013 for an antibody that was synthesized following a remarkable case that left physicians at Addenbrooke's Hospital scratching their heads back in 2008. A patient came in with severe bleeding consistent with hemophilia, but instead of killing the patient, the bleeding stopped normally. Investigators then tracked down the antibody that was responsible to come up with an anticoagulant that could promise to prevent heart attacks and strokes, without the bleeding threat.

"It is absolutely unheard of that any anticoagulant that has been tested on a preclinical basis or has eventually gotten to market didn't cause bleeding--they all do," said Professor Jim Huntington, a coagulation expert from the Cambridge Institute for Medical Research, in an interview with FierceBiotech back in 2013. Huntington collaborated on the project with Addenbrooke's Dr. Trevor Baglin.

After doing some preclinical proof-of-concept work that backed up investigators' belief in their synthesized version, J&J came out on top of the bidding and will now focus on getting it into Phase I as they begin a long odyssey in the clinic gathering the substantial data that will be needed to eventually back up a new drug application.

Peter DiBattiste

"We're obviously very attracted to this asset because of the promise it offers as an anticoagulant with an even better bleeding profile than the agents out there," says Peter DiBattiste, global development head for cardiovascular at Janssen. DiBattiste describes this drug as a true next-gen successor to the new class of anticoagulants now seizing market terrain. "We've been working on Xarelto for the better part of a decade, so it's a good fit for us and it's a perfect fit for our portfolio."

- here's the release

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