Avalanche’s Post-AMD Pivot Takes Step Outside Ophthalmology

How far will Avalanche Biotechnologies Inc.’s pivot take it outside of ophthalmology?

Following the release of disappointing topline results of its lead gene therapy candidate for age-related macular degeneration last June, Avalanche Biotechnologies has undertaken a series of significant pivots to right its ship.

After releasing those results, the Menlo Park, CA, biotech company underwent a change in leadership. By July, Thomas Chalberg Jr., PhD, had stepped down as CEO and president, and in November former Celladon Corporation CEO Paul Cleveland was named Avalanche CEO.

Then, the company this month made a striking move to remake itself as a genetic therapy innovator with designs beyond ophthalmology.

The latest move was its announced acquisition of Paris-based biotech Annapurna in a stock transaction valued at a reported $105.6 million. Annapurna is advancing gene therapies in a variety of disease states outside ophthalmology.

Avalanche had approximately $258 million in cash as of December 31, 2015, which the company says should be sufficient to fund its development programs for at least the next 36 months.

With the acquisition of Annapurna, Avalanche will have more gene therapy programs to fund. Annapurna has focused on gene treatments targeting a genetic disorder linked to emphysema and chronic occlusive pulmonary disease, cardiomyopathy associated with Friedreich’s ataxia, hereditary angioedema, and severe allergies.

Company spokeswoman Lauren Glaser says that the acquisition of Annapurna will have no effect on the development of AVA-101. “As announced, we continue our preclinical studies on both AVA-101 and AVA-201 for the potential treatment of wet AMD and will announce the path forward for those programs at mid-year,” she says.

Avalanche will look far and wide for places to spend its cash. “While these assets are focused outside of the eye,” Glaser says of the Annapurna programs, “the company continues to scour the sector for additional gene therapy assets in the field of ophthalmology and beyond.”

To be clear, Avalanche’s investors and chairman still have strong ties to ophthalmology.

Among Annapurna’s backers is Versant Ventures, the San Francisco-based investment firm that has backed numerous ventures in the ophthalmology space. Versant has no board representation. But General Partner Bill Link is a co-chair of OIS.

The combined company will be headquartered in Menlo Park and will retain its leadership with Cleveland continuing as CEO and Mark Blumenkranz, MD, as board chairman. Blumenkranz, co-founder of several ophthalmology companies, is closing in on 20 years at the Stanford University School of Medicine, where he currently chairs the ophthalmology department. Hear Blumenkranz talk about his ophthalmology career here.

But the two executive leaders of Avalanche bring experience from outside of ophthalmology. Cleveland previously was CEO of Celladon Corporation, a developer of cardiovascular gene therapies.

Annapurna president and CEO Amber Salzman, PhD, will become president and chief operating officer of the combined company. A former GlaxoSmithKline executive, Salzman had launched a variety of biotech start-ups before joining Annapurna in 2014.

Time will tell how the deal plays out. The public markets didn’t appear to be impressed.

Since Avalanche announced the acquisition on February 1, its stock price has continued to slide from $6 to around $4 a share. Shortly before Avalanche announced those topline Phase IIa results of its AVA-101 trial last June, the stock traded as high as $40, but slipped precipitously to around $17 days before the release of the trial results.