VC dollars rain onto Intarcia on diabetes implant hopes

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Intarcia Therapeutics’ $210m fundraising to support late-stage development of its diabetes product ITCA 650 will probably rank as 2012’s biggest venture capital round. Having secured the backing of Quintiles last year, the California group appears to have built substantial belief in its plan to pit a once-yearly implant in a global superiority trial against oral antidiabetic drugs.

After raising close to $350m in 17 years of existence, and exploring and shelving agents for cancer and hepatitis C, Intarcia has settled on a strategy of using its Duros technology to secrete a GLP-1 agonist to help control diabetic patients' blood sugar. However, with the fourth GLP-1 having received a positive European recommendation last week in the form of Sanofi’s Lyxumia, the implanted pump will need to show not only that it is better than oral drugs like Januvia, but also that it offers a useful advantage over its injected counterparts.

Building hope

The $210m raised from existing investors New Enterprise Associates, New Leaf Venture Partners and Venrock, along with new backers Baupost Group, Farallon Capital Management and three institutional investors, ranks as the biggest funding round in at least six years, according to EvaluatePharma analyses (VC funding for human therapeutics remains depressed, April 20, 2011). It eclipses Sympogen’s $143m raised in March 2011, and will give a welcome boost to the lacklustre venture numbers that have worried the industry for some time.

The stage was set by a strategic alliance forged last December with the clinical research organisation Quintiles, involving financial backing and operational support. The new round comprises $160m in equity and a $50m debt placement.

Intarcia is certainly in need of it: its phase III trial plans for ITCA 650 will enrol 4,450 patients, a number that will likely put the total development bill into nine figures. The pivotal trials are expected to begin in the first quarter of 2013 and report in 2014.

The product, a subcutaneous osmotic mini-pump compared in size to a matchstick – it is 44mm long and 4mm in diameter – releases exenatide over a year. Exenatide was the very first GLP-1 agonist, launched as Byetta, Bristol-Myers Squibb’s twice-a-day injection.

Byetta’s originator, Amylin Pharmaceuticals, reduced the need for injections to once weekly with the later product Bydureon, a drug that has struggled to make headway against the top-seller in the class, Novo Nordisk’s Victoza.

Is there room?

With the GLP-1 class expected to grow 22% each year between 2011 and 2018, to $7.4bn, there would seem to be room for a product like ITCA 650. However, much of the growth is driven by the once-daily injected Victoza, which continues to outperform forecasts.

Bydureon and Lyxumia represent two new entrants just this year. GlaxoSmithKline’s albiglutide and Eli Lilly’s dulaglutide are waiting in the wings, with launches forecast for 2013 and 2014, while the next phase might involve combinations with long-acting insulins like Lantus and Tresiba (Event – Lyxumia decision key to Sanofi’s diabetes defence, October 11, 2012).

The question for a product like ITCA 650 is not just whether it is superior to the oral drugs Januvia and Amaryl, but what value it brings to diabetes treatment when compared against other GLP-1s. Reducing the number of injections might be seen as an important treatment advance – however, the convenience of Bydureon’s weekly injections does not seem to be a winning factor when compared with Victoza as the Novo product is still forecast to be the biggest seller in 2018 (see table).

Intarcia touts the Duros technology as “game-changing”. A partnership with big pharma might lend some credence to that claim, although the size of the fundraising suggests that there is significant confidence in the technology.

The company points out that its current strategy has allowed existing shareholders to retain all of the value of ITCA 650. If registration and commercialisation go well, the investors’ record bet would go down as one of the great biotech gambles; if it goes badly, it would be yet another cautionary tale.

GLP-1 outlook
Annual ww sales ($m)
Product Company 2012 2014 2016 2018
Victoza Novo Nordisk 1,635 2,398 3,112 3,799
Bydureon Bristol-Myers Squibb 86 654 1,181 1,661
Lyxumia Sanofi 12 191 393 555
Dulaglutide Eli Lilly - 66 302 500
Albiglutide GlaxoSmithKline - 82 186 273
Byetta Bristol-Myers Squibb 137 290 241 214
Semaglutide Novo Nordisk - - 7 15

To contact the writer of this story email Jonathan Gardner in London at jonathang@epvantage.com

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