Constellation Pharma Mulls IPO After Genentech Declines to Buy
Published: Aug 26, 2015
August 25, 2015
By Mark Terry, BioSpace.com Breaking News Staff
Cambridge, Mass.-based Constellation Pharmaceuticals announced yesterday that its longtime partner, Genentech , had decided not to buy Constellation.
In January 2012, Constellation and Genentech, a member of the Roche Group, signed a strategic agreement that focused on epigenetics and chromatin biology for cancer drugs and other diseases. Constellation received $95 million made up of an upfront payment and three years of collaboration funding. Genentech also had the option to buy all outstanding shares of Constellation based on pre-established terms. Genentech also had the option to acquire Constellation’s BET and EZH2 programs, as well as other programs.
In a statement made to Xconomy, Genentech’s spokesperson, Nadine Pinelli, indicated that Constellation’s epigenetic drugs “are not a strategic fit for our portfolio at this time.”
Pinelli went on to say, “Our rigorous portfolio review process is driven by multiple criteria including understanding the biology of a molecule and balancing the risk and reward of each project. All of these factors are considered within the context of our existing drug development portfolio.”
Having been locked into a relationship with Genentech that prevented Constellation from going public for the last three years, Keith Dionne, president and chief executive officer of Constellation, indicates that an IPO is under consideration.
“Once we saw [the markets] starting to [open up],” said Dionne to Xconomy, “we realized our portfolio was really much more targeted towards what public companies are looking for, and a little less oriented towards where Genentech wanted to go.”
Constellation hasn’t made many public announcements lately. Most recently, in April, the company announced it had started a Phase I clinical trial of CPI-1205, an EZH2 inhibitor, in lymphoma patients. EZH2 is an Enhancer of Zeste Homolog 2 (EZH2), part of a multi-protein complex known as the polycomb repressive complex 2 (PRC2). PRC2 suppresses gene expression. Certain types of diffuse large B cell and follicular lymphomas have mutations in EZH2 genes and is often overexpressed in other cancers. Inhibitors of EZH2 alter gene expression in a way that cause cancer cell death.
Back in January, when the strategic agreement between the two companies was essentially completed, Constellation laid off 23 employees. About 55 staffers remained.
“The collaboration came to an end this month,” said Dionne in a statement at the time. “Genentech chose three targets for exclusive development, with milestones and royalties going forward.” At the time, Dionne refused to speculate publicly on whether Genentech would acquire the company.
In October 2014, Constellation secured a $15 million senior secured loan with Oxford Finance and Silicon Valley Bank. It had also closed on a Series D financing round totaling about $5 million from existing investors Third Rock, The Column Group, Venrock and SROne, which it was planning to use for operations and to fund three ongoing Phase I clinical trials for CPI-0610 and another Phase I trial for CPI-1205 in lymphoma. The company has raised about $154.5 million in five investment rounds.