Durham-based drug developer BioCryst Pharmaceuticals is buying a West Coast drug developer in a bid to achieve together what neither company has been able to do alone: produce new treatments for the debilitating hepatitis C infection that afflicts 170 million people worldwide.
BioCryst announced Thursday it will buy San Francisco-based Presidio Pharmaceuticals in a $101 million stock deal that will pair the developers into a “real company” with drugs on the market, said BioCryst CEO Jon Stonehouse.
“We have a number of shots on goal,” Stonehouse said. “In our business you need that because good science doesn’t always translate well in the clinic.”
BioCryst is developing antiviral pills to be taken once daily. They are designed to replace current hepatitis treatments that are taken through IV injections or drug cocktails that can have painful side effects. The company could have its first commercial products as early as 2016 if its experimental treatments are validated in human drug test trials, Stonehouse said.
The challenges are immense in an industry plagued with a “history of systematic failure,” said analyst Steve Brozak, president of WBB Securities in San Diego, Calif.
“This program is so early stage,” Brozak said of BioCryst’s drug development strategy. “These programs are totally expensive and they are fraught with unfortunate but realistic scientific failure.”
Hepatitis C is a viral disease that leads to inflammation of the liver, which can result in pain, infection, cirrhosis and jaundice.
Trials and reviews
Neither BioCryst, founded 22 years ago, nor 6-year-old Presidio has a drug on the U.S. market despite more than $200 million spent on research and development. Stonehouse said BioCryst has staffed up on people with expertise in two key areas the company will need to market its products in this country: clinical drug trials and regulatory reviews.
The deal, expected to close in the first quarter of 2013, will yield $25 million in financing previously committed by Presidio investors. The companies will combine under a new corporate name and remain headquartered in Durham, with operations in Birmingham, Ala., and in San Francisco.
BioCryst and Presidio are not strangers to each other. Both have received venture capital from several Baker Brothers funds in New York. Baker Brothers’ managing partner Felix Baker also sits on Presidio’s board of directors. Felix and Julian Baker are each listed in federal regulatory filings as 10-percent owners of BioCryst.
BioCryst’s stock, which has gained more than 75 percent in the past year, closed up 25 cents at $4.36 Thursday.
BioCryst, which employs 42 in Durham and 31 in Birmingham, will gain 19 employees through the acquisition of Presidio, a privately held company.
BioCryst is developing drugs to treat gout and influenza as well as hepatitis C. Its flu treatment, peramivir, was approved in Japan and Korea in 2010. Presidio specializes in developing antiviral treatments for hepatitis C.
BioCryst got a huge boost from the federal government in 2007 in the form of U.S. Department of Health and Human Services grants totaling about $235 million to develop flu treatments.
BioCryst has worked its way through about two-thirds of the federal money, Stonehouse said.