For most drug companies, completing Phase III clinical trial enrollment is its own reward. In the case of Eyetech Pharmaceuticals Inc., however, the achievement was also worth an extra $54.2 million from its venture capital backers.
Last August, Eyetech closed a $108.4 million round of venture capital funding, which stands as the market’s fourth-largest biopharma deal to date (See PE Week, 8/13/01). The Series C infusion was split into two tranches, with Eyetech immediately receiving half the committed capital. The second half was predicated on the New York-based company signing up at least 1,080 patients for Phase III trials on its Macugen antibody, even though it hadn’t yet even completed Phase II testing.
“Investors were willing to give us cash up front because they were excited by the technology, but I think the enrollment milestone criteria was put in place to make sure everything was following a strict timeline,” says David Guyer, co-founder and chief executive of Eyetech.
Not only did the company hit its mark and trigger the $54.2 million second tranche, but it actually oversubscribed its enrollment with 1,196 patients and finished the task ahead of schedule. Now all that’s left is carrying out the testing in order to improve efficacy and safety of a product that could vastly reduce the number of people suffering from age-related vision loss.
Each year, approximately 200,000 individuals over the age of 55 are diagnosed with age-related macular degeneration, which can ultimately lead to irreversible blindness. The disease is caused by a dangerous buildup of blood vessels, or angiogenesis, behind the retina that ultimately causes leakage. Eyetech was formed under the belief that this condition is caused by a protein called vascular endothelial growth factor (VEGF, pronounced VEG-F), and that an antibody restricting VEGF growth could, if nothing more, stabilize the angiogenesis.
Macugen is that antibody, and it is given to patients via an injection into the eye’s vitreous humor between the lens and the retina. Of the Phase II trial patients, over 90% reported at least a stabilization of vision loss over a three-month period. Perhaps more importantly, approximately 26% experienced a reversal of blood vessel leakage to the point where their vision was improved by at least three lines.
“People think of our anti-VEGF compound as being anti-angiogenesis, but it also has anti-permeability properties,” Guyer explains. “What this means is that the sub-retinal fluids are reabsorbed by the drug, and then the photo receptors which are still alive kick back in and go back to work.”
The company plans to have its product on the market by 2004, in part thanks to an FDA decision to fast-track Macugen.
As for future venture funding, Eyetech has no plans to do anything but eventually begin scouting the public markets. Moreover, the company has no interest in being an acquired, even though it would be a tempting target for many big pharma players.
“Our mission is to be a complete company dedicated to the back of the eye, and management and the board are united to doing it ourselves,” Guyer says.
JPMorgan Partners led the now-completed Series C deal with a total commitment of $25 million. Each participating firm had its investment split evenly between the two tranches. Other investors included first-timers BB Biotech, MPM Capital, Alta Partners and existing backers Merrill Lynch and Schroder Ventures.
Eyetech received a post-money valuation of $200 million as part of the funding. To date, it has raised over $142 million.
Contact Dan Primack