An option-to-buy deal, when one company agrees to buy another on prearranged terms after a series of milestones are met, doesn’t always lead to an acquisition. Sometimes, as with a 2016 deal between Biogen and Rodin Therapeutics, the arrangement fizzles and the smaller company charts a new course.
Rodin, a Cambridge, MA, startup trying to develop drugs for the cognitive impairment associated with tough neurological diseases like Alzheimer’s and Parkinson’s, closed a $27 million round this morning from backers including founding investor Atlas Venture, Google’s venture arm, and others.
Notably missing from that group, however, is Biogen (NASDAQ: [[ticker:BIIB]]). In January 2016, Biogen teamed with Atlas to announce a $17.3 million financing for Rodin while nabbing an option to an exclusive right to acquire the company for up to $485 million in future payments. But Biogen’s last annual report shows that the company terminated its pact with Rodin in 2016—as well as a similar option-to-buy deal with another Atlas-incubated startup, Ataxion.
According to the filing, Biogen bought $8 million in Rodin stock in December 2015 and ended the deal a year later. Separately, it paid $1.6 million for Ataxion stock in February 2014 and terminated the agreement during the fourth quarter of 2016. Ataxion has since merged with Luc Therapeutics, another Atlas startup focused on neurological diseases.
Biogen spokesman Matt Fearer declined to comment on the company’s decision to end both deals, or provide any details beyond the 10-K. Rodin CEO Adam Rosenberg says the two companies mutually agreed to end the deal; that though Biogen didn’t participate in this round, it remains a Rodin stockholder; and pointed out that this wasn’t a case where Biogen dumped a drug it bought and returned the rights to Rodin.
“We continue to have a good dialogue with them,” Rosenberg says, “but we thought it made sense to terminate the exclusivity and the option and move forward on our own.”
This outcome isn’t unusual; sometimes option-to-buy deals end in acquisitions, other times they flame out. Atlas, for example, also seeded Annovation Biopharma and Arteaus Therapeutics with buyers in place (The Medicines Co. and Eli Lilly, respectively) and consummated both deals later on. Celgene (NASDAQ: [[ticker:CELG]]) passed on an option to acquire Acetylon Pharmaceuticals, but followed through on a deal to buy Quanticel Pharmaceuticals. Novartis (NYSE: [[ticker:NVS]]) ended an option to buy deal with Proteon Therapeutics (NASDAQ: [[ticker:PRTO]]), which later went public. Constellation Pharmaceuticals lost out on a potential acquisition from Genentech. The list goes on.
Rodin was formed in March 2013 through a strategic partnership with Germany-based drug discovery company Proteros Biostructures, and is developing epigenetic drugs meant to reprogram neurons to help regain some of their ability to function. The drugs themselves block enzymes known as histone deacetylases, or HDACs—a well-known molecular target that has led to multiple cancer therapies already, but never a drug safe enough to be used chronically for a brain disease.
The idea is this approach would lead to a boost in cognition for people with neurodegenerative diseases like Alzheimer’s, Parkinson’s, or frontotemporal dementia. And Rosenberg says the company has made progress in figuring out ways to make potent, yet selective enough HDAC blockers to impact these diseases without causing unintended safety problems, but that will be put to the test soon. The company expects to begin its first clinical trial, a Phase 1b study in Alzheimer’s, by the end of 2018, Rosenberg says. The funding should get Rodin through the study.
