The Baltimore, Md.-based company, which develops treatments for pain management, announced its shareholders would own 64% of a public company made from Arcion and
Arcion raised more than $17 million in funding from
The reverse merger will be something of a homecoming for Arcion Therapeutics founder Dr. James Campbell. He’s a professor of neurosurgery at Johns Hopkins University and one of the early investigators of capsaicin.
Capsaicin is the active ingredient in chili peppers, and it reduces the effects of chronic pain by burning off nerve endings. Just getting this pain-relief treatment can be so painful that it is typically given only after a liberal dose of lidocaine, the local anesthetic dentists use when pulling teeth.
Campbell used his capsaicin research as the basis for his first startup,
Now Arcion, Campbell’s second startup, is buying the remainder of his first startup. He will become the combined company’s chief medical officer. Anesiva CEO Michael Kranda will maintain his position as head of the combined company.
South San Francisco-based Anesiva went public in February 2004 at $16 per share. The stock rose to $19.25 in its first day of trading.
But during the last five years, the company went through at least two major rounds of layoffs, cutting 45% of its staff in April 2005 and 20% again in September 2008. Anesiva’s CFO quit in February 2008 and the company eliminated the CFO position a year later.
Anesiva’s stock fell, dropping to below 10 cents a share at one point in December 2008. By April 2009, Nasdaq put the company under review for not meeting the minimum listing requirement of at least $10 million in shareholder equity. By mid-July Nasdaq determined to delist the company.
During its tenure as a public company, several of the venture investors that had initially put more than $97 million into the company continued to fund it.
Indeed, VCs have put plenty of support into companies chasing the pain market, with little to show for it.
Investment peaked in 2007, with VCs investing more than $720 million in 49 companies addressing pain, the largest amount they’ve invested in at least 10 years, according to Thomson Reuters. Startups developing pain-relieving drugs make up the bulk of the fundings (21 such companies attracted more than $400 million of that dealflow), with device makers and others rounding out the total.