Drug development co Chiasma raises $33.5m

pharmaceuticals

Roche canceled an agreement for Chiasma's product, but the company's investors still believe in it.

Chiasma, which has completed Phase III trials for a drug for treatment of acromegaly (a disorder stemming from an excess of growth hormones), has raise $33.5 million from existing and new investors. This is an impressive achievement for a company that only four months ago had a commercialization agreement for its leading product with Roche canceled. It appears that the company's investors still believe in its product, and believe that Roche's reasons for canceling the agreement were linked to its strategic concerns, and had nothing to do with the product's quality or the size of the market and expected profit from it. In August, Roche explained that it had decided to discontinue the agreement "after obtaining additional information from the trial, and following additional consultation with the regulatory authorities," but stated that the results were good.

The amount raised was earmarked for both completing the process of registering the product for marketing, with submission of the file to the US Food and Drug Administration (FDA) scheduled for mid-2015, and for setting up infrastructure for marketing the product.

Acromegaly is a rare disease, and the number of doctors specializing in it is very limited, which means that marketing it should not be expensive. It is also possible that the amount raised will be used for developing additional products based on the company's technological platform, which makes it possible to take drugs orally instead of by injection.

The agreement with Roche should have generated $600 million in revenue for Chiasma, assuming that the product had reached the market and succeeded in it. Chiasma received $65 million as an advance, and probably another few million dollars when the Phase III clinical trials were successful.

Most of the money is not staying in the company. Chiasma's investors are mostly older venture capital funds, and after the contract was signed, they preferred to divide the money and shut the company down. The company management and employees, who believe in its technological platform, planned to buy the technology from the company and found a new startup based on it. Cancelation of the agreement with Roche came at a time when the company still had employees overseeing the registration of the product, but the R&D, clinical trials, and business strategy teams had already been dissolved. Chiasma is now being rebuilt. It appears that the MPM, the fund that holds most of its shares, changed its mind about the company's potential, is supporting the company's continued activity, and also participated in the current round.

Chiasma's investors include Abingworth, Arch Ventures, F2 Ventures, MPM, and Ruth Wertheimer.

Published by Globes [online], Israel business news - www.globes-online.com - on December 30, 2014

© Copyright of Globes Publisher Itonut (1983) Ltd. 2014

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