A portfolio company of Irvine-based Tech Coast Angels (TCA), an angel investment network for early-stage companies, was acquired last month for $500 million by Swiss drug giant Novartis AG (NYSE: NVS), which was valued at $216 billion as of last week.
The deal, for TCA-backed DTx Pharma, which is based in San Diego, has a potential value of $1 billion, officials said. Another $500 million may go to DTx Pharma if the preclinical stage biotechnology company meets certain drug development milestones over the next several years.
DTx Pharma was a member of NuFund Venture Group, which was formerly called TCA-San Diego. The company joined prior to the investment group’s rebranding. NuFund led the 2018 and 2019 investment rounds for DTx Pharma, TCA said.
The sale generated “robust” returns for TCA, the group said earlier this month.
“This is an excellent example of our value as angel investors—where our members not only invest but also get involved and add value with their expertise to help build a great company that is changing our world for the better,” TCA chairman David Friedman said in a statement.
TCA has invested more than $270 million in more than 525 companies the past 25 years, and has helped attract more than $2.2 billion in additional capital/follow-on rounds.
Drug Delivery Tech
DTx Pharma is developing a means to streamline the delivery of small interfering RNA (siRNA) therapeutics, which target and block gene expression to treat diseases.
“Cells have been trained for billions of years to reject foreign RNA molecules because viruses inject RNA into the body,” CEO Artie Suckow told the Business Journal.
DTx Pharma’s Fatty Acid Ligand Conjugated OligoNucleotide (FALCON) technology looks to solve that by combining siRNAs with naturally occurring fatty acids to improve the distribution of the treatment in the body.
“You can think of cells’ fatty acid receptors as a kind of chaperone for fatty acids,” Suckow said. “We attach the fatty acids to the siRNA and trick the cell into taking up that RNA so it can get rid of those bad genes that are driving different diseases.”
The company’s treatment for a class of Charcot-Marie-Tooth disease (CMT), a disorder whose symptoms include the weakening and wasting of muscles in the lower legs, received orphan drug designation from the FDA in June.
The treatment, called DTx-1252, targets the gene responsible for that class of CMT, called CMT1A. About 80% to 85% of patients with CMT1A are diagnosed before the age of 20, according to Suckow. They suffer from impaired balance and coordination and sometimes require foot surgeries.
“These patients usually miss upwards of 30 to 40 days of work a year because of their condition,” Suckow noted.
“With its resources and capabilities in neuromuscular diseases, Novartis is well positioned to accelerate the development of DTx-1252 and provide hope to patients, who are desperately in need of therapy,” Suckow said in a statement.
Over $100M in Funding
DTx Pharma raised more than $118 million in funding prior to its Novartis acquisition.
Of the company’s funding, $2.5 million came from TCA. Only 12 of TCA’s 525 portfolio companies exceed DTx Pharma’s funding from the investor network, officials said.
DTx Pharma got its start in 2017 after Suckow left his work with microRNA Therapeutics at clinical stage biopharmaceutical company Regulus Therapeutics Inc. (Nasdaq: RGLS).
He co-founded the company with two colleagues from Regulus, John Grundy and Adam Pavlicek.
Prior to that, Suckow worked on drug discovery for diabetes at Johnson & Johnson (NYSE: JNJ) and AstraZeneca PLC (Nasdaq: AZN).