|Spinifex Chairman Heath Lukatch|
A little more than a year ago, Melbourne, Australia-based Spinifex decided to take part of a $45 million round to set up an office in Stamford, CT, with the clear intention of putting its mid-stage pain drug in a better position on Big Pharma's food chain. And today that strategy paid off handsomely with a deal to sell the company for $200 million down and an unspecified number of millions in milestones as Novartis gets back into the pain business and expands on its neuroscience efforts.
In an email response to FierceBiotech, Spinifex CEO Tom McCarthy declined to lay out all the financial specifics in the deal, but noted that there's about $500 million left on the table in prospective gains if the biotech's work pans out as hoped.
For most of its existence, Spinifex was highly virtual, operating with two full-time staffers coordinating with a crew of consultants. That was enough to get through a mid-stage study that flagged the potential of EMA401, a drug that works by blocking the angiotensin II type 2 receptor--AT2--a new approach to controlling pain that marks a sharp departure from the problematic opioids that dominate the market. That study, published in The Lancet, produced positive data on its effect in controlling drug-resistant pain among patients suffering from postherpetic neuralgia.
Novartis ($NVS), of course, is maintaining its traditional rigid silence about the deal. The Basel-based pharma company has one of the most aggressive R&D operations in the Big Pharma world, but it's just as extreme about avoiding discussing topics like milestones.
Novartis plans to hustle the medication into a Phase IIb study for either painful diabetic neuropathy or postherpetic neuralgia, with longer term plans for pursuing a label for broad peripheral neuropathic pain.
"Novartis historically had a strong interest in analgesics," notes McCarthy. "I think one of the great stories from this transaction is Novartis moving back into pain R&D and expanding their neuroscience interests. Further questions about strategic fit are best directed at them. I think they will be a great partner and I have every confidence in EMA401 hitting those milestones .... but time will tell."
Recognizing its potential, Novo A/S stepped in to lead the last round, which brought Spinifex's total raise to $70 million. A-lister Canaan stepped in for the first time as well, joined by the founding investors GBS Venture Partners, Brandon Capital Partners, Uniseed and UniQuest. That mix of global money and a U.S. presence will likely influence other biotechs Down Under, which often struggle to obtain a higher profile in the U.S.--the Broadway of biotech.
"The success of Spinifex and the tremendous potential for EMA401 to help patients suffering from neuropathic pain is a significant example of how an international venture capital syndicate, partnering with Australian-based investors, can bring university technology closer to commercialisation," noted Heath Lukatch, the biotech's chairman.
- here's the release