NEW YORK and LEXINGTON, MA, August 31, 2015 — Bristol-Myers Squibb Company(NYSE: BMY) and Promedior, Inc., announced the companies have entered into an agreement that grants Bristol-Myers Squibb an exclusive right to acquire Promedior and gain worldwide rights to its lead asset PRM-151, a recombinant form of human pentraxin-2 protein in Phase 2 development for the treatment of idiopathic pulmonary fibrosis (IPF) and myelofibrosis (MF). PRM-151 has been granted Fast Track designation in the U.S. and Orphan designation in the U.S. and Europe for the treatment of MF and Orphan Designation in the U.S. and Europe for the treatment of IPF. Promedior is a clinical stage immunotherapy company pioneering the development of targeted therapeutics to treat fibrotic diseases. Total aggregate payments to Promedior under the agreement have the potential to reach $1.25 billion, which includes an upfront cash payment for the right to acquire Promedior, an exercise fee payable if Bristol-Myers Squibb elects to exercise its right to acquire the company, and subsequent clinical and regulatory milestone payments.

“Bristol-Myers Squibb continues to invest in building a diverse specialty portfolio, focusing on innovative approaches that can transform the treatment landscape for patients with serious diseases,” said Francis Cuss, MB BChir, FRCP, executive vice president and chief scientific officer, Bristol-Myers Squibb. “PRM-151 will complement our growing early-stage fibrosis portfolio, and we are excited by its potential to address multiple fibrotic diseases.”

“We are pleased that Bristol-Myers Squibb has recognized the value of Promedior’s clinically validated approach to directly address the underlying pathology of diseases involving fibrosis,” said Suzanne L. Bruhn, Ph.D., President and Chief Executive Officer of Promedior. “With the strong strategic fit between our companies, we intend to continue to move PRM-151 forward rapidly as a new treatment option to address the unmet needs of patients with myelofibrosis, idiopathic pulmonary fibrosis, and other fibrotic diseases.”

PRM-151 has been shown in multiple preclinical models to regulate monocytes and macrophages at areas of tissue damage to prevent and reverse fibrosis, including IPF, acute and chronic nephropathy, liver fibrosis, and age-related macular degeneration. Promedior has advanced PRM-151 into clinical trials focused on two orphan fibrotic diseases (MF and IPF).

Bristol-Myers Squibb is developing an early stage fibrosis portfolio that includes BMS-986020, a lysophosphatidic acid 1 (LPA1) receptor antagonist in Phase 2 development for the treatment of idiopathic pulmonary fibrosis. Other areas of focus include nonalcoholic steatohepatitis (NASH), systemic sclerosis, and chronic kidney disease. Additionally, the company has executed a series of agreements aimed at further advancing its fibrosis development program, including an option to acquire Galecto Biotech AB, a company with an inhaled inhibitor of galectin-3 in Phase 1 development for the treatment of idiopathic pulmonary fibrosis, a research collaboration and license agreement with the California Institute for Biomedical Research (Calibr), and a translational research collaboration with The Medical University of South Carolina.

Under the terms of the agreement, Bristol-Myers Squibb will make payments aggregating up to $1.25 billion that includes an upfront cash payment of $150 million as consideration for both the right to acquire Promedior and as payment for services in support of the MF and IPF Phase 2 clinical trials. The companies have agreed on a development plan that will be executed by Promedior. It is anticipated that the Phase 2 trials in MF and IPF will be initiated in the coming weeks. Bristol-Myers Squibb can exercise its right to acquire Promedior upon completion of either of these trials.

By Brian Gormley
After two rough years, health-care venture capitalists are adapting to deal with what could be more tough times ahead.

While medical companies have produced some of the best exits recently-–most notably, Ardian Inc.’s $800 million sale to Medtronic Inc.–-the downturn has left many companies gasping.

“The biggest issue in health-care venture capital is that most of the funds are out of money,” said David Collier, managing director of venture firm CMEA Capital. As a result, “We’ll continue to see bankruptcies in both devices and drug-development companies.”

Investors do not expect the public markets to rescue them anytime soon. While some companies are going public, few can do so on their terms. This gives corporations the edge in alliance and merger talks. Since these companies are increasingly worried about regulatory risk, however, they are less willing to pay up for rights to therapies that are far from U.S. approval.

The trend is spurring some firms to search for opportunity to gain leverage by bankrolling biotech companies through Phase III trials. The final stages of human studies are often too costly for venture firms alone, but by teaming up with other types of investors, such as growth-equity, hedge and crossover funds, VCs may be able to fund a drug to regulatory approval in some cases, said Michael Ross, managing partner of venture firm SV Life Sciences.

Some drugs, for example, have potential in niche and large markets. By funding relatively small Phase III studies to gain approval in a niche indication, a company could secure revenue to pursue a larger one. With an approved product, it also would be better-positioned to bargain with partners or acquirers.

“In the absence of an IPO market, pharma companies realize they’re the endgame for most of our companies,” Ross said. “It will restore an economic equilibrium if we have alternatives.”

Venture firms are also urging their portfolio companies to cut their reliance on venture capital by courting pharmaceutical partners early on. “The intelligent thing in the coming year is to improve your relations with large strategic partners earlier,” said John H. Friedman, managing partner of Easton Capital. “It’s the most efficient way to go about it.”

Another alternative firms are considering is reverse-merging a biotech with a company that has cash to complete advanced clinical trials. That’s what Transave Inc. backers-–which include Bessemer Venture Partners, Prospect Venture Partners and Quaker BioVentures-–did in December when they united the business with publicly held Insmed Inc.

The new company-–46.7% owned by VCs, and led by Transave Chief Executive Timothy Whitten-–has capital to bring Transave’s drug, Arikace, through Phase III studies in cystic fibrosis patients with pseudomonas lung infections and lung infections due to non-TB Mycobacteria.