A Triangle startup that launched last year has landed a $150 million financing deal as it moves its lead program into late-stage clinical trials.
Pathalys Pharma, led by former Liquidia CEO Neal Fowler, announced the deal this week. It includes a combination of equity and product financing. The funding will support two upcoming phase 3 studies and subsequent pre-commercialization activities for the startup's lead drug, upacicalcet.
Life sciences investment firm Abingworth led the financing, which included global investment giant The Carlyle Group (Nasdaq: CG) and the health care investment firm OrbiMed. Pathalys' founding investors Catalys Pacific and DaVita Venture Group, which is part of the health care company DaVita (NYSE: DVA), also participated in the financing.
This two-prong approach to financing is the result of conversations Pathalys had with various firms amid a challenging funding environment in 2022. While declining to provide specific numbers, Fowler described the $150 million as a healthy balance of both equity and product financing, the latter of which will be paid to investors as a certain portion of future revenue from upacicalcet.
"There is a lot of money out there, but people are hesitant to deploy capital given the rate of change in the marketplace," Fowler said. "For us, it was about finding the right structure."
Connected to the transaction, Pathalys is collaborating with Launch Therapeutics to move upacicalcet, or PLS240, through clinical trials. Launch Therapeutics is essentially the clinical trial execution arm of Abingworth and was formed last year after Carlyle acquired the investment firm.
Under the co-development agreement, Launch Therapeutics will oversee the the day-to-day operations of the clinical trials, which includes working with a contract research organization and other vendors, Fowler said. Meanwhile, Pathalys remains in charge of the development of the drug and is responsible for manufacturing, regulatory interactions and commercialization activities. Launch Therapeutics is led by former CRO executives, including its CEO, Anshul Thakral, the former chief commercial officer of Wilmington-based PPD.
This approach means Pathalys, which has five employees, isn't required to build out its own clinical trial operations. Additionally, because of the product financing arrangement, both Launch Therapeutics and Pathalys are incentivized to ensure upacicalcet successfully makes it through clinical trials and is approved by the U.S. Food and Drug Administration. The two identical phase 3 studies, each involving 375 patients, will get underway in the second quarter, and Pathalys will likely release results from the studies in early 2025.
The startup launched after securing exclusive rights from the Japanese firm EA Pharma to develop and commercialize upacicalcet worldwide outside of Asia and Japan, where it was granted marketing authorization in August 2021 under the brand Upasita. The startup is developing the drug to treat secondary hyperparathyroidism in patients who receive hemodialysis. The company was formed through initial seed financing from Catalys Pacific and DaVita Venture Group.
Since launching, the company's main priority has been to secure financing to support clinical trials and operations through to commercialization. But Fowler said Pathalys plans to add other assets to its pipeline and expand its chronic kidney disease portfolio.
Depending how the company grows and evolves, it could add to its headcount while remaining based in the Triangle area. Additionally, Pathalys will look to bring more people on board to build out its sales and marketing operations as it nears the commercialization of upacicalcet.
"We are very driven to create a multi-asset company," Fowler said. "(PLS)240 is the beginning for us."
