Good Therapeutics, a private company that raised just $30 million in venture financing since its 2016 foundation, said Wednesday it had signed a deal to sell itself to Roche for $250 million without ever running a clinical trial.
The deal provides a roughly eight-fold return for Good’s investors, which included Codon Capital and RiverVest Venture Partners. And it marks an encouraging datapoint in what remains a difficult market for biotech startups, which have struggled to maintain their valuations in the face of sharp decline in initial public offerings.
The transaction is focused on Good’s most advanced project, a preclinical cancer therapy designed to make blockbuster treatments like Keytruda benefit more patients.
Scientists have spent decades trying to make medicines out of cytokines, powerful bodily proteins that lead the immune system’s attack on foreign invaders. Simply infusing patients with cytokines can make for an effective cancer treatment, but the influx of so many inflammatory proteins leads to untenable toxicity for most people. Good’s approach relies on crafting inactive cytokines and equipping them with a sensor calibrated to PD-1, a protein present on cancer cells and the target of many successful therapies. In animal studies, those modified cytokines float harmlessly through the body until they encounter PD-1, at which point they switch on and galvanize the immune system.
“That seems like the sweet spot — regulating cytokines and delivering them to the cell types where they’re needed,” said John Mulligan, Good’s founder and CEO.
Good developed its lead project, which uses the cytokine IL-2, to the precipice of a first clinical trial. The company had intended to recruit a deep-pocketed partner to help pay for development, Mulligan said, but Roche’s offer to buy it outright accelerated the process — and provided a rapid return for Good’s investors.
“We’ve gone from basically an idea on a napkin to a program Roche was willing to spend $250 million for for $30 million,” Mulligan said. “I think that’s how biotech companies should work: super focused, really efficient.”
The deal covers only Good’s work pairing PD-1 and IL-2, which allows the company to spin its core technology out into a new firm, Bonum Therapeutics, to apply the same idea to other cytokines and molecular targets.
Bonum is raising money from the same syndicate of investors with a plan to replicate the Good process, developing early-stage cancer medicines in hopes a larger firm will license or acquire them once they show potential for clinical success.