I wrote about two life-sciences companies that had raised a pile of venture capital to fund the development of cancer treatments on Monday.
But attracting big money from private-equity firms is no guarantee that the growth will continue.
Solstice Neurosciences Inc., of Malvern, which raised $85 million in November 2006, was sold last week to US WorldMeds L.L.C., of Louisville, Ky., for just $35.7 million.
What happened to slash the value of the six-year-old company?
In 2008, the Food and Drug Administration began reviewing the safety of treatments based on botulinum toxins, such as Allergan Inc.’s Botox, used for cosmetic purposes, and Solstice Neurosciences’ Myobloc, which was approved by the FDA in 2000 to treat severe neck pain and spasms, also called cervical dystonia.
Solstice Neurosciences had been formed in 2004 and backed by five investor groups to acquire the worldwide rights to Myobloc from its developer, Ireland’s Elan Corp. PLC. By 2007, the company had 150 employees working at its headquarters in Malvern and manufacturing operations in South San Francisco.
The regulatory review had been prompted by the consumer-advocacy group Public Citizen, which cited FDA data of 180 cases of serious reactions, including 16 deaths, among patients who’d received injections of the two products. Those reports indicated that botulinum toxin could spread beyond the injection site.
At the time, Botox, a drug that has attained notoriety in the cultural consciousness with people hosting “Botox parties,” got most of the attention. After all, Allergan generated $1.2 billion in sales from Botox in 2007, while Myobloc sales were just $20 million.
On completing its review in April 2009, the FDA ordered the companies to notify doctors about the risks and required that a “black-box” warning be placed on the labels of both drugs. Allergan continued to hum along with Botox sales of $1.3 billion in 2009, although perhaps reflecting the weak U.S. economy, Botox sales were unchanged from the previous year.
Not so Solstice Neurosciences. The most recent news release on its website is one from February 2008 discussing the FDA review. It’s not clear how many employees the company had or what the sales of Myobloc were by the time US WorldMeds stepped into the picture.
US WorldMeds said in a statement that the acquisition would “lead to powerful new innovations and accelerate growth opportunities.” But it also said the headquarters of the combined organization would be in Kentucky.
Founded in 2001, US WorldMeds is a privately held specialty drug company that currently sells Revonto, a treatment for malignant hyperthermia. It is in late-stage development of a non-narcotic treatment for symptoms of acute opiate withdrawal.
New York-based MTS Securities L.L.C., which advised Solstice Neurosciences on the transaction, was the financial adviser to Conshohocken-based NuPathe Inc. on its recent initial public offering.
Start ’Em Up
The grassroots entrepreneurial support group called Philly Startup Leaders has named a new leadership team.
Jameson Detweiler, founder of GreenKonnect, which describes itself as a search engine for the green building industry, will be president.
He succeeds cofounder Blake Jennelle, who’s been the group’s most vocal cheerleader for Philadelphia’s technology-oriented start-up community.
Philly Startup Leaders, which got its start in a bar in September 2007 with entrepreneurs trading war stories, now hosts more than 30 programs a year.
Jennelle, who’s working on his second start-up, said that the all-volunteer organization will retain its mission and that many of the founders will remain on the board.
I don’t think it’s getting worse. I certainly don’t think we’re headed for a double-dip. But I don’t think it’s getting better anytime soon.
- Glen T. Senk, chief executive officer of Urban Outfitters Inc., talking about the economy during a Monday conference call with analysts.