Photo: (Left) Hans Knapp, Partner, Yaletown Partners and CVCA Awards Committee Chair and (Right) Dr. Luc Marengere, Managing Partner, TVM Life Sciences
Venture capitalist Dr. Luc Marengere has been investing in and selling companies for more than two decades but has never experienced a deal go through as quickly as Eli Lilly’s acquisition of Montreal-based AurKa Pharma.
The average deal — based on his prior experience — has taken at least four or five months to complete, says Marengere.
Eli Lilly’s $575M deal for AurKa took just seven weeks from the last data update to the announcement on May 14, 2018. “It’s practically unheard of,” says Marengere, Ph.D. and managing partner at TVM, said of the timeline.
The speed is indicative not only of the quality of AurKa’s oncology compound AK-01, which has shown to treat multiple types of cancerous tumors, but also the work done by the AurKa management team, TVM, Chorus, an R&D division of Eli Lilly, and the clinical research community in Quebec and other parts of Canada.
“Everyone came together and recognized the uniqueness and potential of this compound,” says Marengere.
TVM investors will also benefit: Eli Lilly bought AurKa for $575M, including an upfront payment of $110M and the remainder in milestone payments. As part of the deal, AurKa shareholders are eligible to receive up to $465M in regulatory and sales milestones should the AK-01 compound gain approval in the U.S. and other markets and achieve certain sales levels, according to the announcement.
“The acquisition of AurKa Pharma supports Lilly’s external innovation strategy, in which we seek to partner with leading life science venture capital firms in order to identify, support and access promising innovation in areas of unmet medical need,” stated Darren Carroll, senior vice president of corporate business development at Eli Lilly said in the press release announcing the deal. “We are excited with the value TVM created for this compound through its early-Phase studies, and we look forward to more opportunities in the future.”
TVM generated nearly eight times its investment on the upfront alone, says Marengere. If the milestones come in they can generate up to an additional 33 times the invested capital. “This is a deal that could generate as much as $430M of returns, if the milestones are paid, which is more than two times the entire fund with one deal,” says Marengere.
Montreal-based TVM Capital Life Science was awarded the 2019 Venture Capital Deal of the Year award for its investment in AurKa, a company established in 2016 to develop AK-01. The compound was originally discovered through one of Eli Lilly and company’s research and development programs. AK-01 has the potential to treat certain types of solid tumors, including small cell lung cancer and treatment resistant breast cancer. The project was fully financed by TVM Life Science Ventures VII from the fall of 2016 until it was acquired by Eli Lilly.
Marengere also credits the “good management of Caroline Fortier and Mark Cipriano,” the CEO and CFO respectively of AurKa from 2016 until it was acquired last year, for their success. “Within 18 months we had clinical data that showed both safety and efficacy for the compound,” Marengere says. He also noted that Eli Lilly, which had initial rights to buy AurKa, “were convinced to buy it earlier than initially anticipated.”
Today, he says the compound is being developed by Eli Lilly in a number of clinical trials for a broad range of cancer patients. “This is a compound that could be fast-forwarded now to commercialization should the data continue to be positive,” says Marengere. “At the end of the day, we do this to improve the quality of life of patients.”
Fortier, who is now CEO of Esperas Pharma Inc. and Ocellaris Pharma Inc., two other TVM oncology companies, said she’s very proud that all of the clinical work to develop and move the compound forward was done in Canada.
“In Canada, patients don’t have the same access to these early-stage compounds,” she says.
Fortier also extended her thanks to the patients who participated in the study and to oncology clinical research community of Canada, including physicians and clinical coordinators who are doing clinical studies alongside their regular practices and workloads.
“We have excellent facilities in Canada and they have been wonderful partners,” she says. “We feel fortunate to have access to such high-quality clinical research teams and establishments and to be able to provide patients access with early-stage investigational anti-cancer medicines. It’s a win-win.”