Facet Biotech cuts the burn, adds a product
When Facet Biotech spun out of PDL BioPharma at the end of last year, it took with it a collection of promising clinical-stage antibody programs and enough cash on hand to satisfy an appetite for more.
Late last week, Facet bellied up to the biotech smorgasbord and ordered a $20 million helping from Trubion. The upfront fee buys a stake in TRU-016, an early-stage cancer therapy for chronic lymphocytic leukemia. And Facet--which also is taking a $10 million equity stake in Trubion--committed up to $176.5 million more if the drug works for a variety of cancer indications as well as multiple sclerosis.
"This is the type of program that we've been looking for for the last six months," says CEO Faheem Hasnain. "We scoured 100 opportunities, and this has been at the top of the list. I don't contemplate jumping back in soon, or if we did it would be something at an earlier stage."
TRU-016 will become Facet's fifth clinical stage program in development.
Facet's lead drug daclizumab, a multiple sclerosis therapy partnered with BioGen Idec, is being readied for a pivotal late-stage study in the first half of next year. Enrolling the first patient in Phase III will trigger a $30 million milestone for Facet. Volociximab, which is currently in Phase 1/2 for ovarian and non-small cell lung cancer, is also partnered with Biogen. And a Phase II multiple myeloma study for elotuzumab is likely to begin next year, which would trigger a $15 million milestone payment from Bristol-Myers Squibb. PDL192 is in early dose escalation studies for various solid tumors.
PDL decided to restructure and launch its biotech assets in a separate company--leaving behind a shell operation to handle patent rights--after one of its shareholders launched a blistering attack on the way former executives had managed the company, creating a bad burn rate. The newly-born Facet, which was capitalized with about $400 million, wasted no time in getting focused on scaling down that burn rate. Just weeks after the spinout, Facet axed about 80 workers, shrinking its payroll to about 200. Currently, says the CEO, there are some 190 workers at Facet. The company recently issued a guidance to shareholders that its burn rate for 2009 would be a much more modest $80 million. And it could shave millions more off of that figure if it can find a way to restructure its lease.
"PDL assigned liabilities in order to reduce encumbrances," says CFO Andrew Guggenhime. "The lease was the most striking example. It's four or five times the size we need, and we're aggressively looking to sublease" or find some other way to get out from underneath it. The lease represents "$10 million to $12-plus million in excess cost. If we're successful in a sublease, we could reduce our annual burn by that amount.
"In the best case outcome, we would sublease the entire two facilities and we would move to another facility," he adds, that's more appropriate for a developer its size. Facet, he says, would stay in the Bay area.
In order to boost the income side of the equation at Facet, the CEO says that it's actively pursuing talks to partner up with pharma companies on its protein engineering technology. Facet knows how to improve antibodies already on the market, he adds, and that could position the company as a key player in the market for biosimilars.