Proteon sets out on its own after Novartis waves off a $550M deal

Proteon CEO Timothy Noyes

Back in 2009, Proteon Therapeutics embarked on a mid-stage study of its blood vessel-dilating drug with big money on the line: If the Phase II trial went according to plan, Novartis ($NVS) had the right to buy the company for up to $550 million. Five years later, Novartis has walked away from the table despite what Proteon says was a successful study, leaving the biotech to fend for itself as it prepares for Phase III.

But CEO Timothy Noyes said his company's not panicking, and Proteon believes it can push its drug forward with venture cash and in-house expertise alone.

Proteon's top prospect is PRT-201, a synthetic enzyme that can help dilate arteries and veins, which the biotech is developing as a complementary therapy for patients who undergo vascular access surgery. In order to make hemodialysis easier, surgeons often create a vein-to-artery pathway called an arteriovenous fistula (AVF), and PRT-201 is designed to keep vessels open and blood flowing in ensuing weeks.

In that Phase II trial, Proteon tested the drug on 151 chronic kidney disease patients undergoing AVF procedures, finding that PRT-201 was able to prolong the need for angioplasty and reduce the amount of time between the creation of the pathway and its use in dialysis, the company said. Alongside Novartis, Proteon reviewed the mid-stage results with the FDA and set out a plan for Phase III.

All the while, the biotech was negotiating with Novartis on just how much of that $550 million was on the table, and, without getting into specifics, Noyes said the two could never come to a mutually agreeable price tag, even though Novartis' "views of the data and their enthusiasm for the opportunity clinically and from a commercial standpoint were very much aligned with ours."

The partners kept at it through the summer, but the September expiration date on Novartis' option came and went without a deal.

"Because of the strength of our investor syndicate and their confidence in our data and our team, they were supporting us to get the best deal possible," Noyes told FierceBiotech. "And that allowed us to be firm, as Novartis was, as well."

Now, with its Big Pharma ex out of the picture, Proteon is working with that syndicate to put together a new funding round, looping in new investors as it prepares for Phase III studies of PRT-201, set to kick off this summer. Proteon plans to stick with chronic kidney disease patients, which Noyes said helps derisk the pivotal trial, and the biotech is chasing the same primary endpoint as in Phase II, just with a larger population.

And while Noyes said the experience of working alongside a major player was a positive one, Proteon isn't on the hunt for another partner to pitch in late-stage work.

"Our belief now is that the best thing to do is finish Phase III on our own and see what an M&A would look like at that point," Noyes said. "I expect we'd have attractive offers, but if we still don't like the numbers, I believe we can launch on our own with a specialized sales force."