Israeli Biotech Chiasma Reels in $70 Million Despite Roche Pullout

February 27, 2015
By Riley McDermid, BioSpace.com Breaking News Sr. Editor

Perennial fundraiser Chiasma Inc., an American privately-held biopharma company developing “orphan” drug octreotide capsules, has raised yet another infusion of capital, saying Friday it has finalized a $70 million Series E round from a constellation of investors, new and old.

The current round includes new investors Rock Springs Capital and Sofinnova Ventures, an unnamed “blue chip public investment fund,” as well as existing investors MPM Capital, F2 Capital, 7 Med Health Ventures, Abingworth and ARCH Venture Partners.

It comes as welcome news less than a year after global behemoth Roche AG cancelled a commercial agreement with the Israeli startup for a product for treatment of acromegaly (gigantism) because the product did not meet its clinical trial criteria.

That year-old deal should have generated $600 million for Chiasma's investors, but only brought in about $65 million advance and some milestone payments before the cancellation. Roche said in August that while the Phase III trial results were good, it would opt out of the deal "after receiving additional information about the trial, and after further consultation with the regulatory authorities."

Now, however, Chiasma is forging ahead. It said the money would immediately be ploughed into the U.S. commercial launch of its lead product, octreotide capsules for adults with acromegaly, a rare endocrine disease, which could happen as soon as 2016.

"The commitment from both new and existing investors provide us with the resources to advance our regulatory efforts, prepare for a successful launch of octreotide capsules, test oral octreotide capsules for additional indications and further invest in earlier-stage TPE programs that can fuel our growth over the long term," said Roni Mamluk, chief executive officer of Chiasma. "With this financing in place, we are well positioned to advance a portfolio of oral drugs that address unmet needs in orphan indications."

It said it remains on track to submit a New Drug Application (NDA) to the U.S. Food and Drug Administration (FDA) for octreotide capsules in the second quarter of 2015. If approved, the drug will be the first and only oral somatostatin analog, which will be a relief to patients who can currently only receive the therapy via injection.

“Acromegaly typically develops when a benign tumor of the pituitary gland produces too much growth hormone (GH), ultimately leading to significant health problems and early death if untreated. Common features of acromegaly are facial changes, intense headaches, joint pain, impaired vision and enlargement of the hands, feet and tongue,” said Chiasma.

Diabetes, hypertension, cardiac and cerebrovascular disease and respiratory disorders are all associated with the disease, which can sometimes require surgery or radiation to remove the tumor.

“Medical treatments available currently include dopamine agonists, GH antagonists and injectable somatostatin analogs, the current standard of care,” said Chiasma. “Currently available somatostatin analogs require large-bore needles, for injection into muscle (octreotide) or deep into the tissue underlying the skin (lanreotide).”

There is no question that Chiasma is a scrappy, long-term fighter. After a massive restructuring in 2006, the company was then hit hard by the recession, but managed to right itself after bringing in formerBioMarin Pharmaceutical Inc. exec Fredric Price as chairman and CEO. Mamluk eventually replaced Price but kept the startup pointed in the right direction.

It also has been no slouch in the venture capital raising department. Previous financings for the 10-year-old company include $38.5 million for a Series D in July 2012 from MPM, ARCH and Abingworth, three debt financings totaling 15.8 million from 2008 to 2011; a $44 million Series C from Ofer Hi-Tech, ARCH, MPM and F2; and a $7.7 million Series B from Israel investors Ofer Hi-Tech, Yissum Research Development, Jerusalem Global Ventures and F2.

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