There is often something to admire in stubborn companies that continue to pivot and develop and convince investors to continue providing ever-larger sums to support their work to change the world.
US-based Intarcia Therapeutics’ latest raising of a combined $210m in equity and debt is “the largest sum to be raised by a private biotechnology company in at least 25 years” and comes after more than 15 years and more than $195m in prior equity pumped into the company. Oh, and that doesn’t take into account five years of repeated amendments to a planned flotation.
Since that postponed initial public offering attempt, Intarcia has pivoted away from its then-lead therapeutic target areas – breast cancer and hepetitis C – to type two diabetes. The latest funding sees Intarcia, which is backed by strategic partner and service partner Quintiles, prepare its phase three trial for a once-yearly drug, ITCA 650, to treat diabetes.
Intarcia has just one of what news provider Fierce Biotech reports as 221 new developments targeting diabetes, of which type two is the most common form of diabetes and presents when the body either does not produce enough insulin or becomes resistant to insulin, resulting in high levels of blood sugar.
According to a June 2011 Lancet publication quoted by Intarcia, an estimated 347 million adults worldwide suffered from type two diabetes in 2008; that number is expected to rise to 472 million by 2030.
The World Health Organization estimates deaths resulting from diabetes will double between 2005 and 2030 and estimates the global cost of diabetes to have exceeded $400bn in 2010, while United Healthcare projects the cumulative cost of diabetes care will reach $3.4 trillion over the next decade (see graphic).
But while Intarcia’s latest equity and debt round comes from financial investors – a mix of venture capital firms, secondaries investors that bought out previous shareholders and hedge funds looking at a potential flotation or profits from the debt/equity instruments – the biopharma group has been working on its strategic partnerships.
In December last year, Intarcia signed an alliance with Quintiles, a biopharmaceutical service provider that has helped develop or commercialize 18 of the 20 best-selling diabetes products and still provides “capital solutions” to some of its clients after spinning off its corporate venturing unit, NovaQuest, in late 2010.
In that alliance, Quintiles said it would support the accelerated development of ITCA 650 by its capital solutions group providing a combination of equity, product and operational investments. Quintiles said it was not part of the latest investment round.
Last year, Intarcia added it was also back then in negotiations to select a global pharmaceutical partner to contribute funding for the clinical development and commercialization of ITCA 650. But the size of its latest funding round means it said it had now “retained full strategic and financial control of its lead product candidate, ITCA 650”. The value of the pharma partnership was probably worth the difference between the planned $47m Intarcia had been raising in the round, according to its August regulatory filing, to its final size of $210m. Intarcia was unavailable to comment.
Kurt Graves, who in April added the titles of president and chief executive to his previous title of chairman of Intarcia after the prior departure of Alice Leung, said: “After considering multiple options to maximize shareholder value and scaling up for our ITCA 650 phase three program, we chose to align with this elite group of investors, [which has…] expressed its confidence in our ability to shepherd ITCA 650 successfully through clinical trial development and to strike the collaborations needed to make ITCA 650 a global market success.”
The fall-out from failing to find a pharma leader has probably pushed back the phase three trial by about a year as the Quintiles alliance last December had talked about it beginning in the first three months of 2012 but the latest announcement said it would start by March.
But, with such sizeable funding in place, if Intarcia can carry out a successful trial it would be in a stronger position to reap the returns of what could be a blockbuster treatment worth billions of dollars per year as well as a technology potentially applicable in other areas.
It might also be an interesting acquisition target for a consumer goods or food company even beyond its pharma peers as the sector becomes a target for outsize corporations. Otherwise, it is another $500m investment project that fails to deliver.