Acquisition of Boston biotech for up to $120M a ‘validation’ of Ora’s model

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The CEO of Andover-based contract research organization Ora said the planned acquisition for up to $120 million of a Boston-based biotech firm it spun out seven years ago is validation of the company's model for drug development.

French drug developer NiCox S.A. last week announced plans to buy Aciex Therapeutics, a virtual biotech developing an eye drop to treat allergic conjunctivitis that's completed late-stage trials, and at least two other earlier-stage drugs. NiCox will pay $65 million in cash and shares upfront, plus contingent value rights (CVRs) to acquire more shares of Nicox if the lead drug, called AC-170, and the two other undisclosed products are approved in the U.

The value of the CVRs will depend on when the various treatments are approved, with a $120 million maximum value of the acquisition if AC-170 is approved before Dec. 1, 2016, and the two others are approved by July 1, 2021.

The idea on which Aciex is based was developed at Ora by CEO, Stuart Abelson along with VP of Corporate Development, Matthew Chapin and Aciex President Tom Cavanaugh. Abelson said it's the first time the 35-year-old contract research organization — which was started by his father to specialize in ophthamology treatments — spun out a company which it then helped bring a product through clinical trials with the aim of having it acquired.

"Rather than as a back-burner project (at Ora), we treated them as a client," said Abelson. He said at the time Aciex was founded in 2007, it was "a bold vision" to found a virtual biotech with the intention of having it acquired by a big pharma company. It has never employed more than two people, said Abelson, outsourcing nearly everything. Today, he said, that's become a common practice in biotech.

"We're seeing R&D be shifted out of pharmaceutical companies and into companies like Aciex," he said.

Ora will continue to conduct trials of AC-170 and the other drugs in Aciex's pipeline as it works toward approval.

Abelson said the company raised $42 million in venture capital funding since its founding in 2007 from Bay City Capital, HealthCare Ventures, New Enterprise Associates, Ora Investment Group and, in 2011, Illinois pharmaceutical firm Akorn Inc.

Abelson said the sale of Aciex "validates the model" Ora has since used for other biotech startups it's spun out, including Entopica Therapeutics. Ora has a team devoted to seeking out new technologies from businesses, universities or hospitals around which to form companies, he said.

Abelson, who took over the company in 2007, said a growing portion of Ora's $50 million in annual revenue comes from royalties and milestone payments, on top of its fee-for-service contract research work. Ora has helped more than 37 products get U.S. approval for eye treatments, and the company now has 120 employees, 85 of which are in the Andover headquarters.