The sale of Amira Pharmaceuticals will likely go down as one of the standout life sciences deals of 2011—it certainly ranks as one of the biggest payouts in San Diego, where Amira was founded in 2005.
But what may be more significant than hitting the bell in the strongman game at the biotech carnival is the way Amira approached the deal—and how the buyout has opened the way to an intriguing new business model for life sciences startups.
Luke already has explained how Amira beat the odds when New York’s Bristol-Myers Squibb (NYSE: [[ticker:BMY]]) agreed in July to pay $325 million in upfront cash, and another $150 million in anticipated milestone payments. It’s unusual these days when a big pharmaceutical writes a check that big for a six-year-old startup whose lead drug candidate has barely completed early stage trials.
Amira also kept some other drug candidates out of the deal. Some went to a new San Diego biotech called Panmira Pharmaceuticals, which is continuing the development work under CEO Hari Kumar, who was previously Amira’s chief business officer. Another important program, which was the focus of a partnership Amira had with GlaxoSmithKline (GSK), was spun into a new standalone company.
In other words, Amira worked to find a good home for every important drug in its pipeline. This doesn’t happen in many buyouts, as the acquiring pharmaceutical company is often interested in one or two drugs in development, and the rest get relegated to the “no more resources” pile.
Since then, Amira co-founder (and San Diego Xconomist) Peppi Prasit has raised the curtain on another life sciences startup, Inception Sciences, which was conceived as a kind of mothership for spinning out new drugs. The idea was to create an incubator-type holding company that would enable Amira’s drug discovery group to hatch new drug development programs. Prasit, Jilly Evans, and John Hutchinson, who were the scientific founders of Amira, would lead the effort to identify new pathways as well as potential drug compounds for these new targets.
Under this new business model, each group of new drug candidates would be organized as a separate development program within different business entities. For venture firms, investing would be like ordering from the à la carte menu, giving investors an equity stake in a specific drug program—without the general and administrative baggage that typically goes with a biotech acquisition. As the drug candidates of each program advance to
