Roche AG (SWX: ROG) has notified Israeli startup Chiasma that it has cancelled a commercial agreement for a product for treatment of acromegaly (gigantism). The agreement, signed in February 2013, would have generated $600 million for Chiasma's investors, had it been fully implemented. Due to its premature cancelation, Chiasma's revenue from the deal to date totaled only a $65 million advance and several more tens of millions of dollars as payments for milestones.
In a conference call, Roche explained that in view of its 1st half results, reported on July 27, while the product had achieved good clinical results in its Phase III trials, it had nevertheless chosen to cancel the agreement "after receiving additional information about the trial, and after further consultation with the regulatory authorities." According to Chiasma CEO Roni Mamluk, "The results of the Phase III trials were excellent, and a celebratory event was held in June to publicize them, attended by all Roche's senior executives, who were all happy and satisfied. We were with them in all their meetings with the regulators, and we have before us all the results of the trials we conducted ourselves under their supervision. There is no problem with the results; what is apparently involved is a strategic decision by them whether or not to become more deeply involved in the endocrinology sector (hormone-based drugs)."
In view of these developments, Chiasma is now preparing to submit the results of its trial to the US Food and Drug Administration (FDA) in the coming months, and expects to launch its product in 2015. "Our goal is to look for a partner in launching the product, but we can certainly also do it by ourselves. We are now producing the product ourselves through outsourcing, and because the product treats a rare disease, the number of doctors dealing in the field is small, and they can also be reached with a limited sales staff," Mamluk explains.
She added that most of the money received by the company had already been divided among its investors, but they had expressed their willingness to finance the company again. Following the signing of the agreement, when Chiasma thought it would gradually transfer the product to Roche, it had already begun winding up its activity, had laid off some of its employees, and had intended to give its remaining products to a spinoff. The company will now rejuvenate itself, to the satisfaction of its remaining employees, and promote its other products by itself. Mamluk said these additional products were 18 months away from a clinical trial.
Acromegaly causes excessive growth of bones in the body, suffering, and early death. There is a drug for treating the disease in the market manufactured by Novartis, but it requires a very painful injection, because the injected material is very viscous. Chiasma's product is designed to enable the patient to use the drug orally instead of by injection. The global market for treating the disease is estimated at $1.8 billion, including $1.4 billion in sales of Novartis's injectable drug.
Founded in 2001, Chiasma has undergone several crises before being in effect restarted in 2008 under the management of Mamluk and US CEO Fredric Price, who resigned after the agreement with Roche was signed. Up until the agreement was signed, the company had raised $100 million, mostly after reorganization. The investors in the company in the later stages were mostly from the US: funds F2, MPM Capital, GE Equity, Abingworth, and Arch Venture Partners. These funds were the main beneficiaries of the amount already paid to the company, and will probably be the main supporters of the company, now that it is being rejuvenated.
Published by Globes [online], Israel business news - www.globes-online.com - on August 6, 2014
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