Biogen spinoff Bioverativ buys Bristol-Myers’ iPierian spinout True North for $825 million; deal shows how to get several bites at the same assets

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The News:

Bioverativ Inc. (Waltham MA) announced that it entered into a definitive agreement to acquire True North Therapeutics Inc. (South San Francisco) for up to $825 million, including an upfront payment of $400 million.

Bioverativ Inc. agrees to acquire True North Therapeutics Inc. for up to $825 million Click To Tweet

Through the deal, which is expected to close in mid-2017, Bioverativ will obtain global rights to True North’s lead candidate, TNT009, for the treatment of a rare blood disorder called cold agglutinin disease (CAD), according to FirstWord Pharma.

“One of our strategic priorities is to invest thoughtfully in business development with a focus on building our pipeline in areas where we believe we can make a real difference for patients,” commented Bioverativ CEO John Cox. “This acquisition of True North is aligned with those goals and with our vision to become the leading rare disease company focused on blood disorders,” Cox added.

Under the transaction, True North investors are eligible to receive additional payments of up to $425 million contingent on the achievement of future development, regulatory and sales milestones.

Bioverativ explained that TNT009 is a monoclonal antibody designed to directly target the central mechanism of CAD by targeting the protease manager, C1s. The therapy, which has completed Phase 1b testing, was awarded orphan-drug designation in the US and EU last year for the treatment of autoimmune hemolytic anemia, including CAD.

Bioverativ launched as an independent company in February following its spinoff from Biogen Inc. (Cambridge MA).

Steve’s Take:

If there ever was a deal demonstrating how to get two bites at a golden apple, or in this case biotech asset, this would be one of the more recent, text-book lessons.

If the deal closes as expected in the coming months, Bioverativ will gain its first clinical-stage asset. Spun out of Biogen Inc. in February with two commercial products and a substantial preclinical program, Bioverativ plans to use its $325 million cash pile to push the products all the way to market, according to FiercePharma.

The True North buy marks the start of that process and, if TNT009 can live up to promising early data, will help Bioverativ realize its vision of expanding beyond hemophilia to develop into a rare blood disorder specialist.

TNT009 is de­signed to tackle C1s, a ser­ine pro­tease en­gaged in the clas­si­cal com­ple­ment path­way in­volved in gov­ern­ing the human im­mune sys­tem, says EndPoints. In­ves­ti­ga­tors tested it on a small group of six pa­tients with cold ag­glu­tinin dis­ease, an au­toim­mune con­di­tion which is de­scribed as a type of he­molytic ane­mia in which au­toan­ti­bod­ies tar­get and de­stroy red blood cells, and high­lighted signs of rapid onset with com­plete re­sponses. That’s what at­tracted the FDA’s at­ten­tion.

True North established itself as a biotech to watch at the European Hematology Association (EHA) meeting 11 months ago, Nick Taylor reports for FiercePharma. At EHA, True North presented data from a phase 1b trial showing four of the first five patients to receive TNT009 responded to the treatment within the first 24 hours. After four weeks of treatment, three of the subjects experienced complete responses, defined as their hemoglobin levels rising to upward of 12 g/dl.

Those resulting data helped True North put together a $45 million Series D round in October, at which time CEO Dr. Nancy Stagliano talked up the prospects of pushing TNT009 through the clinic and to market without the support of a larger partner. She then succeeded in raising $142 mil­lion for True North from some loyal ven­ture back­ers.

For some of the backers that drove True North to its $45 million Series D and earlier rounds, the Bioverativ buyout marks a second success from one source. True North spun out of iPierian Inc. (South San Francisco) in 2013 and received financial support from some of the same investors, including GlaxoSmithKline’s SR One. Those investors profited when Bristol-Myers Squibb Co. (NYC) bought iPierian, and are set to do so again when Bioverativ completes its takeover of True North.

Biover­a­tiv is now sig­nal­ing that it has more deals in mind as it maps its own post-Bio­gen course.

Bottom Line:

Switching briefly from the Bioverativ deal for True North, permit me to summarize the path to riches taken by Dr. Stagliano and her backers. She, I believe, is the real story here.

Forbes says iPierian was started in 2009 as a merger of two east- and west-coast startups, Pierian and iZumi Bio respectively, in order to develop drugs based on iPS cells. iPierian raised ~$80 million over the next five years, in the latter part pivoting its business plan into antibody development.

Its lead program was an anti-tau antibody that Bristol-Myers acquired in April 2014 for neurodegenerative conditions. As part of the asset acquisition, the team at iPierian spun out their second program, a C1 inhibitor called TNT009, into a new startup called True North. This new entity was launched with a Series A financing in June 2014 of $22 million to fund development of TNT009 for a set of rare diseases.

In 2015-2016, True North raised an additional $120 million from blue-chip, later-stage and crossover investors, in three equity financings, bringing TNT009 successfully into Phase 2 with a goal of taking it all the way to market.

Getting two bites at the apple can help juice up the returns for all the shareholders, says Bruce Booth wryly for Forbes.

iPierian was acquired for $175 million on a total equity raise of ~80 million, a reasonable ~2x average multiple for a story that changed significantly from its original idea. Up to $550 million in future milestones were promised, though Bristol-Myers recently out-licensed the asset to Biogen (ironically, Bioverativ’s parent), so it is unclear exactly how much of those economics were transferred to Biogen (versus being renegotiated, as is often the case).

Let’s do some math and dream.

For True North, it’s been acquired for $400 million upfront, with up to $425 million more in milestones, representing a good multiple on the invested capital over just a few years. Across both deals, an aggregate of just $220 million went into these assets for $575 million in upfront value and up to $975 million in milestones–roughly $1.5 billion in total value. Booth points out that some portion of this will go back to the original iPierian investors (through their initial ownership in the spinout and the equity they purchased along the way).

You see the point of all these maneuvers.

The Bioverativ buy­out marks an­other suc­cess for True North CEO Nancy Stagliano, an ex­pe­ri­enced biotech vet who was brought in six years ago to steer a new course for iP­ier­ian. It was she who spun out True North to focus on rare dis­eases and later struck the deal to sell iP­ier­ian to Bristol-Myers.

Steve's Take: True North CEO Nancy Stagliano proves you can get several bites of the apple Click To Tweet

Can you get several bites at the same golden apple and strike it rich? That would be a resounding “yes,” if you’re Dr. Nancy Stagliano and her faithful (and prosperous) backers.

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