When Celgene bought Receptos in 2015, Dr. Sheila Gujrathi, who was chief medical officer of the smaller biotech at the time, remembers of the acquisition, “It was a little bittersweet to have lost a stellar team that we had created together.”
But that gave Gujrathi the chance to start something new. Gujrathi didn’t move over to Celgene when Receptos was acquired, but she joined former Receptos CEO Faheem Hasnain and some of their colleagues, taking the next couple of years “to create the company of our dreams,” Gujrathi says.
That ultimately became Gossamer Bio, of which Gujrathi is now CEO. Officially launched in January last year in a whirlwind 13 months, the San Diego startup, which is developing drugs focused on immunology, raised over $300 million in venture capital funding from investors like ARCH and Polaris Partners. It raised another $276 million on Thursday in an initial public offering, selling some 17 million shares at $16 per share. (On Monday the stock was up over 12% from its IPO price, at $18 per share, and Gujrathi’s nonrestricted shares were worth about $25 million.)
Gossamer has a pipeline of six therapies, three clinical-stage and three preclinical, targeting a range of disease areas from oncology to inflammatory bowel disease to asthma. Planning an IPO just over a year after a company is formed was unusual. In fact, for a few days in January during the government shutdown, Gossamer announced it was going to pursue a rarely used fixed-price IPO that would allow the company to go public without the SEC’s usual input, but it shelved that idea when the government reopened on January 25. Gujrathi said the company needed to go public to raise more capital for its clinical trials.
Gossamer is burning through a lot of cash. As of September 2018 it had $256 million in cash, and in the 9 months ended September 30 its total operating expense was $109 million, according to its S-1. Gossamer’s lead drug candidate is being tested to treat moderate to severe asthma as well as chronic rhinosinusitis, or inflammation of sinuses, with nasal polyps. (Gujrathi herself says she worked on the development of Xolair, an asthma medication, when she was at Genentech in the early 2000s.) The results of a 400-person clinical trial in Japan of its once-a-day pill, the company said in its S-1, showed a “statistically significant improvement” compared with a placebo, with one serious adverse event related to a liver disorder detected in a patient during the study.
However, in another roughly 200-person study comparing its drug candidate’s effectiveness with montelukast (brand name Singulair), the primary endpoint wasn’t achieved. Gujrathi says that was because the study, which had been set up by a company Gossamer acquired, lacked a patient population essentially sick enough to test the efficacy of either drug. Gujrathi still is confident in the future of the drug.
“We did want to start the company with programs that we hope would have a higher than average probability of success,” she says. Still, bringing any of Gossamer’s drugs to market is years away. Gujrathi says the company is not expecting to present new data on its lead drug candidate until 2020. And Gossamer will also face competition in the asthma space from companies like Regeneron and Sanofi when it does get to market.
Gossamer joins a crop of biotechs that have gone public in the last couple of months, most notably Moderna, which raised over $600 million in its IPO but then lost over a third of its value in the weeks following.
“To be here a year later starting up multiple clinical trials,” Gujrathi says. “We’re just thrilled to be in this position.”
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