A Rich Heyman biotech backed by a top Salk scientist is auctioned off for its dwindling cash reserves

07 Sep 2022
endpts.com
AntibodyIPO
It’s time to turn off the lights at Metacrine. The party ended months ago.
The Rich Heyman startup $MTCR came out of the IPO gate in the fall of 2020 with high hopes, a top scientist in the founders circle and a well-connected board of directors in pursuit of one of the hottest targets in drug development. But just a year later its great expectations in NASH had foundered, its stock was in a tail spin and the staff roster was cut to the bone.
In the end, which came on Tuesday after the market closed, its lingering investors were told that Metacrine was being bought out by another struggling biotech, which made it clear that it was primarily interested in Metacrine’s cash balance.
The IPO for MetacrineMetacrine debuted in a go-go market with a valuation of $364 million after pricing at $13, but Metacrine’s stock price was shaved to 47 cents as of yesterday’s close. Now La Jolla-based Equillium, which has seen its own stock price shrivel in a brutal market downturn, will pick up net cash of $26 million after issuing stock worth a 25% premium over that amount.
From the announcement, we learned:
Equillium is not planning to retain any current Metacrine employees and expects to assume minimal operating expenses while maintaining sole discretion over the timing and extent of advancing development of the Metacrine programs.
Heyman, a San Diego-based biotech entrepreneur best known for launching Aragon and Seragon and then selling them for more than a billion dollars, had thrown in his lot with noted Salk scientist Ron Evans in kickstarting Metacrine.
Metacrine had initially tempted investors with a first-gen FXR drug dubbed MET409, and then followed that up with a second-gen therapy designated as MET642. Its board included Kristina Burow at ARCH, Amir Nashat at Polaris and John McHutchison, the CEO at Assembly and former CSO at Gilead. Then mixed results for ‘642 hit last fall in a Phase IIa NASH study — the field has been blighted by setbacks — and the biotech opted to switch focus to IBD, leaving analysts shaking their heads over the prospects of paying for tox work to clear safety frets in the midst of a cash crunch.
By the time RBC’s Brian Abrahams dropped coverage last April, the biotech’s prospects were bleak. In his last note, Abrahams noted:
We see potential for $700M in out-year sales in IBD and some mechanistic rationale, though given limited proof-of-concept data for FXRs in IBD, we assign a conservative 10% PoS to the program.
Now Metacrine CEO Preston Klassen will join the Equillium board as help with a campaign to explore the “strategic opportunities” for the IBD program as Equillium extends its runway to 2024. Equillium $EQ is looking to a near term readout for its lupus nephritis treatment.
Equillium originally obtained its anti-CD6 antibody itolizumab from India’s Biocon more than 5 years ago. Biocon won an OK for the drug in India and sells it as Alzumab.
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