89Bio, which was founded in order to develop a treatment for fatty liver disease that had up to then been developed at Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA), has raised $60 million in a first round of funding. This is one of the largest ever first rounds in Israel, and is more like the amounts raised by pharma companies with breakthrough products in the US.
The round was led by OrbiMed Israel together with OrbiMed US and Longitude Capital, and joined by RA Capital Management and Pontifax. Rohan Palekar has been appointed CEO of 89Bio. He was previously president and CEO of Avanir Pharmaceuticals, which was acquired by Otsuka Pharmaceuticals in 2015 for $3.5 billion.
The innovative molecule at the basis of 89bio's treatment came to Teva in one of its acquisitions, and was not part of Teva's core activity. In a strategic focusing that Teva underwent in 2012, it decided to concentrate its innovative activity on neurology, cancer and women's health. Nevertheless, Teva's new products team headed by Michael Hayden continued to allocate a certain amount of resources to the project, because they did not want to forego it.
The fatty liver disease (nonalcoholic steatohepatitis or NASH) market is a huge medical market with no drug solution. It is a complex metabolic disorder that causes fat buildup in the liver, as well as inflammation and eventually fibrosis, and it can worsen to cirrhosis and liver failure. NASH affects more than 16 million adults in the United States. The exact cause of NASH is unknown, but it is commonly found in people with obesity and type 2 diabetes.
In preclinical studies, 98Bio's drug candidate BIO89-100 demonstrated a long half-life, potentially enabling extended-interval dosing, and significant improvements in biomarkers such as body weight, blood glucose, and lipids. 89Bio also has an undisclosed preclinical compound with potential utility in the treatment of NASH and other related disorders.
because of the large potential market and the lack of solutions, companies with NASH treatments are sold or traded at high values at early stage of development. Nimbus was bought by Gilead for a $400 million advance payment, with further large payments to be made later on (of which at least another $200 million have already been paid) for a product about to enter Phase II clinical trials.
Gilead also bought a NASH product from Phenex at the same stage for a $470 million immediate payment with further payments to come. Intercept Pharmaceuticals, which is at an advanced stage of clinical trials, is traded at a market cap of $2.6 billion, even though the performance of its product is considered to be problematic.
89Bio's product was able to be developed rapidly because it had already undergone development at a pharmaceuticals company and also because part of the team from Teva continues to work on it, so that there was a smooth transfer.
89Bio will officially be managed from the US, but product development will be entirely in Israel, led by Ram Waisbourd, who joins 89Bio as COO and chief business officer, and Dr. Michal Ayalon as head of R&D. Michael Hayden joins 89Bio's board of directors as a founding board member. OrbiMed is represented by Anat Naschitz and Steve Squinto.
Published by Globes, Israel business news - en.globes.co.il - on October 25, 2018
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