taking equity in the drugs they help test. Their participation as investors has been neither commonplace nor, in a couple of high-profile instances, particularly successful—such as when Quintiles Transnational shared with Eli Lilly and private equity firm TPG-Axon the financial risk of two Lilly’s late-stage Alzheimer’s treatments, both of which crashed in Phase III.
In the case of Kineta and its side entity KPI, the bet is that everyone involved in ShK-186 (aka Kineta One) and subsequent projects can find a buyer after Phase 1. After that, clinical trials get a lot more expensive, and the lean-and-mean model starts to break down.
Sometimes that can be a deal killer, but sometimes a team can pivot: Flexion Therapeutics, for example. It was founded last decade to do fast asset-centric development work but realized the big drug companies weren’t so hungry to buy proof-of-concept assets that had finished Phase 2 testing. So it raised more money to take one of its compounds, for osteoarthritis, all the way to approval. It hasn’t gotten there yet, but it went public earlier this year, giving it access to cash it could never tap as a private company.
Despite the slowdown in biotech debuts as spring turns to summer, an IPO isn’t out of the question as KPI looks for more funding beyond the initial $10 million to move more clinical programs forward. “We’re structured as an opportunity for a pipeline of programs,” said Mangess. “We never figured the window would stay closed forever.”
