Just six years after a troubled Benitec Biopharma licensed its expressed RNAi hepatitis C drug program to Tacere Therapeutics, a startup founded by former Benitec executives, the two companies have agreed to merge.
Benitec announced this week that it has acquired Tacere and its HCV drug TT-034, which is expected to enter phase I/II testing in mid-2013, for just under $1.5 million in stock, which translates to roughly 102.3 million shares or about 9.5 percent of Benitec.
Under the deal, Tacere's stockholders also stand to receive a cash royalty on future licensing revenue related to TT-034. Specifically, the royalty will be 35 percent if a licensing deal is signed before the start of phase II testing, 15 percent if it is consummated before the start of phase III trials, or 5 percent if an arrangement is struck just before the drug's submission to US regulators for market approval. Tacere's owners will get a 2.5 percent licensing royalty if a deal is signed after the drug is submitted for market clearance.
Additional terms of the deal, which also includes Tacere's early-stage program in macular degeneration, were not disclosed.
In buying Tacere, Benitec is bringing back in house a therapeutics program that had at one time been its flagship drug-development effort, but which it was forced to hand off amid severe financial troubles.
Despite being a key player in the RNAi field early on, largely on the strength of one of the field's earliest US patents, Benitec floundered after taking legal action against several companies over alleged infringement of that intellectual property.
The patent in question is No. 6,573,099, which essentially claims the knockdown of gene expression using DNA that transcribes double-stranded RNA. In 2004, Benitec sued a handful of companies for patent infringement, and while most took licenses to the IP, one — now-defunct expressed RNAi firm Nucleonics — decided to fight back in court.
As part of Nucleonics' legal gambit, it sought reviews of the '099 patent and its international counterparts in several different patent offices. The cost of the litigation was hefty for Benitec, which eventually convinced the courts to dismiss its suit even though Nucleonics wanted it to proceed. But the damage was done, and Benitec was forced to shut down its US operations and reorganize as a much smaller company in 2006.
All the while, the reexamination of the '099 patent proceeded in the US Patent and Trademark Office, which repeatedly rejected all of its claims. Though the rulings were never final, they cast doubt on Benitec's business and hamstrung the company's efforts to raise needed funding.
In a bid to generate desperately needed cash, in 2006 Benitec handed off the rights to its HCV program to Tacere, which was founded by former Benitec CEO Sara Hall Renison, former CFO Mike Catelani, and former preclinical director Linda Couto (GSN 10/12/2006).
By 2010, Benitec's fortunes changed and it was able to close a key financing round. Most importantly, the USPTO overturned its previous findings and reinstated the '099 patent in full, putting an end to the reexamination process (GSN 11/11/2010). With doubts about its freedom to operate put to rest, Benitec has since found additional funding and launched a series of new pipeline programs.
In the meantime, however, Tacere ran into troubles when Pfizer, which had taken the rights to the HCV program in all countries outside of Asia, decided to close down its oligonucleotide therapeutics unit in early 2011. As part of that move, the Pfizer unit overseeing TT-034 was closed, putting the drug's fate in question. Around the same time, Oncolys Biopharma, which had the drug's rights in Asia, dropped out of its deal with Tacere (GSN 2/10/2011).
In a statement this week, Benitec CEO Peter French said that Pfizer ultimately decided to back out of the Tacere arrangement, leaving the TT0-034 program available to re-acquire.