Today Celgene announced the acquisition of Avila Therapeutics for $350M upfront and up to $575M in future milestones. Congratulations to the Avila team! For those of us involved in the story, we certainly think Celgene’s got itself a great deal.
Like many of the big exits in 2011, Avila is yet another example that taking early stage risk around real innovation pays. The company was started under the name Conxcys back in 2006 by Drs Roy Lobb and Jus Singh. It began life as a “big science, smart chemistry” startup, crafted on a clean sheet of Powerpoint, with a vision for how the systematic discovery of targeted covalent irreversible inhibitors could shape medicine. Having just revisited them, the early plans that Jus shared with us in March 2006 were amazingly prescient in how the story evolved. I highlighted Avila’s pioneering work in one of my earlier blog posts: Bond, Covalent Bond.
From the investment side, Avila has been a huge success. With $51M of equity capital raised over almost exactly five years, the aggregate invested capital multiple is north of 5x on the upfront and up to nearly 15x with the downstream earnouts. For a bit of history: we closed the initial Series A round of $21M in Feb 2007 with a great syndicate: Abingworth, Polaris, Advent and Atlas. Around co-founders Roy and Jus, a great team coalesced shortly after founding: Nagesh Mahanthappa on BD, Wes Westlin on Preclinical, and Russ Petter on Chemistry. These five were the original leadership team that put us on the right course. Mike Bigham of Abingworth also deserves a ton of credit as Chairman and effectively “Acting CEO” of Avila during the early days. Dan Lynch, who was already working with us on two Atlas companies, joined Avila as Executive Chairman in mid-2008, and helped recruit Katrine Bosley as CEO in spring of 2009. Katrine had previously been head of BD at Adnexus Therapeutics which was acquired by BMS in 2007 (where Polaris and Atlas got to see her BD acumen firsthand). Shortly after Katrine’s arrival, we closed on a $30M Series B in July 2009 led by Novartis Ventures’ Option Fund. And our first IND was filed in July 2010, less than 3.5 years after the initial financing.
Fast forward to 2012: with this relatively modest amount of equity capital, the Avila team has been able to bring its lead program, AVL-292, targeting the immunokinase BTK, into Phase 1b clinical trials in lymphoma, get a 2nd program into the clinic (Clovis CO-1686’s recent IND), discover and advance multiple preclinical programs, and establish itself as the leader in the field of covalent irreversible drug discovery.
Avila also was very successful raising non-dilutive capital to help grow the company. We struck a major drug discovery partnership with Sanofi around a basket of targets in Dec 2010, which helped provide the resources to underwrite a significant share of the company’s overall burn rate. The Leukemia & Lymphoma Society also provided an important grant to aid our BTK program’s development. These and other efforts (like our Clovis’ partnership) helped us keep the net equity burn to a reasonable level.
Last year, as our lead AVL-292 program was advancing in the clinic, Avila actively pursued a number of strategic alternatives and wrestled with a number of questions: Do we seek a regional or global partner on AVL-292? Do we do a Series C or do we file for an IPO? Should we do more discovery alliances? Should we focus on licensing or M&A? Katrine and her executive team were truly outstanding at laying out a strategy that explored many of those possibilities. In the end, Celgene emerged as the best partner for Avila and hopefully for realizing the promise of Avila’s covalent programs and platform.
In short, Avila has exhibited many of the hallmarks of a great biotech story today:
- Commitment to discovering and advancing real innovation
- Healthy focus on “equity capital efficiency”
- Dedication to creating strategic optionality for the company’s future
- And, most importantly, a fantastic team
Thanks to Katrine, Jus, Dan, Wes, Russ, Nagesh, Roy, Andrew, Heather, Tandee, and all the rest of Team Avila. Celgene is lucky to have you!