When investors better known for backing public companies jump into a startup’s private financing round, it’s typically a signal that an IPO is on the way. That looks to be the case for Cambridge, MA-based Catabasis Pharmaceuticals.
Catabasis is announcing today that it has raised $32.4 million in equity financing through a Series B round from existing investors and new ones, including an unspecified public crossover fund. New backer Lightstone Ventures joined Catabasis’ existing funding syndicate, which is comprised of SV Life Sciences, Clarus Ventures, MedImmune Ventures, and Advanced Technology Ventures. Catabasis CEO Jill Milne wouldn’t disclose the name of the new public crossover investor, but says that Catabasis has now raised $83 million since its inception in 2008. That figure includes the new round, a $40 million Series A in April 2010 that investors have since boosted to $46 million, and the original angel investment that got the company going five years ago, according to CFO Ian Sanderson.
Today’s cash haul is significant for two reasons: first, it will give Catabasis the juice to get its lead drug candidate, known as CAT-2003, through Phase II studies and—assuming all goes well—begin thinking about a confirmatory trial. But in adding a public investor into its syndicate, Catabasis is also signaling an IPO could be on the horizon if it can continue to progress and get the mid-stage clinical data it is hoping for.
“That is a possibility,” Milne says. “[But] we’d like to get deeper into the clinic with [CAT-2003] and develop some of the earlier assets as well before we start to approach the public markets.”
That’s where the new cash comes in. Catabasis already has two Phase II studies up and running for CAT-2003, and is considering finding a partner to bring a second drug, CAT-1004, into a mid-stage study of its own. With the $32.4 million in the bank, Catabasis now has cash to get it “deep into 2015,” which should allow it to get through those two studies and begin “Phase III enabling activities,” according to Milne.
Both drug candidates are the products of Catabasis’ in-house “SMART-Linker” technology, which it uses to attach two compounds together with a proprietary linker to form a new chemical entity that is supposed hit two targets in a disease pathway at once. The most advanced drug candidate to emerge from that approach is CAT-2003, a chemically-linked combination of niacin and the Omega 3 fatty acid called eicosapentaenoic acid, or EPA.
Catabasis believes this combination approach differentiates CAT-2003 from
