Serial BioPharma Entrepreneurial Team Launches Arrivo BioVentures with $49 Million

May 25, 2016
By Mark Terry, BioSpace.com Breaking News Staff

Morrisville, North Carolina—Arrivo BioVentures launched today with the closing of $49 million in committed capital financing. Jazz Pharmaceuticals led the financing, with Solas BioVentures Fund I, Rex Health Ventures and other private investors participating.

The company was founded by Steve Butts, Bill Wofford, Michael Ackermann and Jed Black. Butts and Wofford were part of the management group that led successful investor exits for Aerial BioPharma, Neuronex, and Addrenex Pharmaceuticals. Black is the therapeutic head for sleep at Jazz Pharmaceuticals, and will act as Arrivo’s scientific advisor.

Butts will be manager and chief executive officer. Ackermann will act as chief business officer. Wofford will act as general counsel and head of corporate development. Karen Adams, of KJA Associates, will act as chief financial officer. Greg Rigdon will be vice president, scientific affairs. Kelly Abernathy joins as executive director of clinical development, and Kenneth Freeman will act as executive director of pharmaceutical development.

The company’s goal is to develop four to six new drugs over the next couple years. As with previous companies, Arrivo plans to “source and acquire” potential drug candidates that are ready for early clinical trials or already in early-stage trials.

“We are excited about the next evolution in our business model,” Butts said in a statement. “We will continue to look for development programs that improve patient care and provide opportunities to minimize the clinical development and regulatory risks. However, our new model with more drug candidates will give our investors greater diversification, and ultimately even more chances for development success.”

The nascent company’s website states, “Our strategy is simple—identify products for our pipeline that we can expedite through the drug development process while minimizing the regulatory and technical risk associated with the program.”

There is no indication what disease areas or types of technology the company is considering, although the company’s website suggests “biologics and small molecules,” which doesn’t really provide much information. “We’ve traditionally been a neuroscience-focused company,” Butts told FierceBiotech. “We did a lot of project financing where we would find one asset or two, say, ‘we need $10 million,’ raise money and put a company around it and go. That worked well. But the challenge was diversification of risk. What we wanted to do, instead of focusing on project financing and fundraising, was get a pool of capital from people who know us or knew our work. Give investors more shots on goal.”

The involvement of Jazz Pharmaceuticals (JAZZ) is interesting. The drug company focuses on sleep and hematology/oncology indications. In its first-quarter filings on May 10, the Dublin-based company reported $336 million in total revenues, primarily from product sales of Xyrem, for narcolepsy, which generated $249.5 million. It also launched Defitelio for patients with hepatic VOD with renal or pulmonary dysfunction following hematopoietic stem-cell transplantation.

Jazz acquired its narcolepsy drug for $397 million from Aerial BioPharma about two years ago.

So, in short, Jazz appears to have invested in a company based less on any technical product, but rather in its management team. “Arrivo’s leadership team, who is well known to us, has the expertise and history in sourcing molecules with a high probability of success and in doing rapid, cost effective, quality development,” said Matt Young, Jazz’s chief financial officer, to FierceBiotech. “Because Arrivo will source molecules, which are in, or ready for, early stages of human clinical trials, we believe our approach to funding Arrivo is a low risk, cost-effective way for Jazz to identify and progress earlier stage development opportunities and to potentially expand our pipeline.”