Acetylon Pharmaceuticals - 2013 Fierce 15

Acetylon Pharmaceuticals
Acetylon steps out of biotech's financial blackout

Based: Boston
Founded: 2008
CEO: Walter Ogier
Clinical focus: Multiple myeloma
Website: www.acetylon.com

The scoop: Celgene ($CELG) has bet more than $100 million on Acetylon to yield a future gem for the biotech giant's leading lineup of multiple myeloma drugs. And it could be only a matter of time and some upbeat trial data before Celgene pulls the trigger on its buyout option to acquire Acetylon, marking a major milestone for the HDAC science from Dana-Farber Cancer Institute and the Broad Institute that could have been lost in the financial wreckage of 2008. Rather, CEO Walter Ogier and his team are racking up some positive results from early human studies of their lead candidate ACY-1215 in myeloma patients.

What makes Acetylon fierce: The market collapse 5 years ago forced biotech entrepreneurs to get creative about starting new companies, as VC outfits were struggling to raise money to finance their future investments and other funders were hunkered down for a financial "nuclear winter," as Ogier described the period.

Dr. Kenneth Anderson and his colleagues at the Dana-Farber Cancer Institute in Boston were less daredevil company creators than pioneering scientists hunting for a new way to shut down one of the most common blood cancers, multiple myeloma. They believed they had a solution with a selective inhibitor of the HDAC6 enzyme from their collaborators at the Broad Institute of MIT and Harvard. Blocking the protein stymies a key protein-disposal system in myeloma cells, leading them to self-destruct while leaving healthy cells unscathed.

Yet venture investors were loath to make bets on promising lab discoveries in 2008, even for those from the renowned Dana-Farber, because capital was in such short supply. Marc Cohen, a successful technology entrepreneur and member of the board of trustees at Dana-Farber, had other ideas. He was interested in investing himself, so why not also tap other potential venture philanthropists--including the community of Dana-Farber boosters--for money to get such discoveries from the institute into commercial vehicles? He teamed up with Anderson and his colleagues Drs. James Bradner and Ralph Mazitschek and with prospective CEO Ogier to found Acetylon in October 2008. Acetylon subsequently secured funding from a number of nontraditional angel investors who were keen to advance the company's multiple myeloma program into clinical development.

Anderson might be the first physician you would want on your medical team in forming a biotech startup working in multiple myeloma, because he is considered one of the leading minds in the field and was one of the investigators who helped usher marquee myeloma therapies such as Millennium's Velcade through clinical trials. He's also served as an FDA adviser on cancer drugs.

With a big name like Anderson's on board, Acetylon was able to score significant early financing without a penny from traditional venture capital firms. Over the first three years, the startup raised $35 million from high-net-worth folks like billionaire Robert Kraft, the famous owner of the New England Patriots, plus a further $6 million in nondilutive funding from The Leukemia & Lymphoma Society. Celgene came along in early 2012 and initially invested $15 million to further fuel development of ACY-1215.

Acetylon, which has other HDAC contenders in preclinical stages for diseases outside of oncology, has attracted interest from Celgene in part because of what ACY-1215 doesn't do. In spite of promising anticancer activity, severe side effects have limited dosages and use of first-generation HDAC inhibitors. In a Phase III study reported in 2011, for instance, Merck ($MRK) revealed that myeloma patients on its HDAC inhibitor Zolinza in combination with Velcade dropped out because of side effects at a much higher rate than those on Velcade and placebo, Myeloma Beacon reported.

However, early clinical evidence from Phase I studies shows that ACY-1215 could be used in combination with Velcade, an injected proteasome inhibitor, and Revlimid, Celgene's best-selling oral drug for blood cancers. Velcade has become a key treatment for myeloma because the drug closes a pathway for cancerous cells to discard proteins, leading to their demise and slowing progression of the disease. Ogier sees its oral candidate ACY-1215 as an agent that could block another avenue for cellular protein disposal.

"With a selective HDAC6 inhibitor, you can shut down the cell's two principal garbage disposal companies," Ogier says, referencing the combination of Velcade and his company's lead candidate. "HDAC6 inhibition also looks to be synergistic with the mechanisms of action of other established anticancer agents including Celgene's immune modulatory drugs."

In preliminary Phase Ib studies, the company reported anticancer responses in 8 of 10 patients on a combination of ACY-1215 and Celgene's Revlimid and responses or disease stabilization in 8 out of 13 patients on Velcade and the HDAC6 inhibitor. One of the patients on the Revlimid and ACY-1215 combo suffered from neutropenia, or low levels of infection-fighting white blood cells. In the next 6 months, Ogier says, plans are to launch a trial of its drug dosed alongside Celgene's recently FDA-approved myeloma drug Pomalyst too. 

Acetylon has been quiet about the exact point at which Celgene would decide whether to exercise its option to acquire the company. Parsing Ogier's statements, the deal would likely come after the startup at least completes Phase I development of ACY-1215. If Celgene pulls the trigger, the company has agreed to pay at least $500 million for the startup up front, $250 million in regulatory milestones and up to $850 million based on drug sales.

"If the acquisition does happen, we'll be in Phase II at that point. If that deal happens, it will be at the high end of the valuations of most cancer deals. So we are excited about that," Ogier says. "This is a very nice nondilutive deal for Acetylon and a significant opportunity for Celgene as well."

And the faith of Acetylon's angel backers would be handsomely rewarded.

Investors: Celgene, Robert Kraft and undisclosed individuals

For more:
Celgene spends $100M for option to buy myeloma drug developer Acetylon
Acetylon grabs $27M in venture cash for next-gen HDAC inhibitor
Cambridge startup launches HDAC platform with Series A

-- Ryan McBride

Acetylon Pharmaceuticals - 2013 Fierce 15
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