Clifford Stocks from Calistoga discusses their acquisition by Gilead Pharmaceuticals




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Video title: Clifford Stocks from Calistoga discusses their acquisition by Gilead Pharmaceuticals
Released on: March 31, 2011. © PharmaTelevision Ltd
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In this episode of PharmaTelevision News Review, Fintan Walton talks to Clifford Stocks, Chief Business Officer at Calistoga
Calistoga Pharmaceuticals: Origins,science and products
Fintan Walton:
Hello and welcome to PharmaTelevision News Review here at Bio-Europe in Milan, in Spring 2011. On this show I have Clifford Stocks, who is the Chief Business Officer at Calistoga Pharmaceuticals, welcome to the show.
Clifford Stocks:
Thank you Fintan, it's my pleasure to be here.
Fintan Walton:
Tell us little bit about Calistoga Pharmaceuticals?
Clifford Stocks:
Very well, Calistoga Pharmaceuticals is a collection of high skilled motivated individuals who are able to create a nice platform and a very good lead compound it ultimately lead to an acquisition of Calistoga Pharmaceuticals by the Gilead [PharmaDeals ID = 39413] which was a nice outcome for investors and for patients. Let me tell you little bit about the origins of the Calistoga, so I was the Head of Business Development for ICOS Corporation for 15-years. ICOS was the originator of Cialis and developed that drug through a joint venture with Eli Lilly and company [PharmaDeals ID = 3199] and commercialized Cialis and ultimately because of the success we had with Cialis we were acquired by Lilly [PharmaDeals ID = 25562] in 2007. ICOS, and characterized, and cloned, and patented the delta isoform of PI3K with the specific intention of developing those compounds for information indications. And that program was not being funded at ICOS and up through starting in 2005 because the commercialization of Cialis was taking most of the funds we've stack ranked our portfolio determined which programs we would work on and which were still interesting but just could not be funded and so that was put in my hands to monetize I was the Vice President of Business Development at ICOS and we monetized it through a spin out or through a license structure of license the entire program the PI3K program from ICOS to a venture backed company called Calistoga, we did that with a contingent license we made it the contingency based on the venture company raising $20 million, so Jamie Topper who was is one of the partners at Frazier Venture Healthcare led those efforts to build the syndicate and they raised $26 million and they were able to license the program from ICOS to Calistoga. Mike Gallatin, who led the efforts at ICOS he was the Chief Scientific Officer of ICOS had left ICOS about a year prior to the acquisition of ICOS and Mike was a venture partner at Frazier Venture so was very familiar with the program knew its potential and was then the founder, the key founder of Calistoga. He recruited two other founders to help him in the money raising and the building of the company those individuals were Neil Giese, Neil is a PhD Cancer Scientist and Roger Ulrich, who is a development person and Roger has a long history in the pharmaceutical arena. So the three of them as founders raised the money, built the company, started hiring people they started with a small team of around 10 people and sorted through the compounds that they had licensed from ICOS determined which of those would be moved forward toward inflammation, which would be moved forward toward solid tumors and which would be moved forward toward hematologic malignancies. And the compound in hematologic malignancies is called CAL101 it was pushed first into the clinic and after conducting a Phase I the team did a Phase I study in normal's to establish a nice tolerability profile for the compound and then took it into a Phase I in patients, and the very first patient they dosed had a PR so that was a very exciting time for the company it was on around that time of course I was staying in touch with my friend Mike Gallatin on around that time of their first patient dosing that I circled back and started thinking about how I might work with the team there at Calistoga, in the midst of that the venture backers who consisted of Frazier Venture Partners, Alta Ventures, Amgen Ventures and Three Arch Ventures wanted to get a CEO and they recruited a very terrific CEO Carol Gallagher, Carol is a Pharm. D., with a strong scientific background that she has a much stronger commercial orientation having gotten good training at Amgen, Lilly and through the Pfizeroncology group. Carol also run Rituxan when it was around a billon dollars and grew it to several billions before she left Biogen Idec and she was part of the Genentech, Roche, Biogen Idec, relationship with the Idec, relationship that ran Rituxan, so Carol had a very strong commercial background in hematologic malignancies and with her vision could see how we were gonna take CAL101 forward for commercial success and we were on that track before we were acquired.
Fintan Walton:
It's an amazing story, because clearly what was what's important from what you just said there was one that you had to have the science, the science was obviously came from you know talented individuals, but what seems to be important was the assembly of the team with different backgrounds, different strengths that can take that platform basically and move it forward?
Clifford Stocks:
Yes, there was a strong team ultimately Calistoga was 23 people and that small team was able to accomplish a great deal with the platform that they had then able to license from Calistoga which consisted of CAL101 and other compounds that were in the pipeline.
Fintan Walton:
So is it possible to repeat the Calistoga story?
Clifford Stocks:
It may be, we are trying now.
Fintan Walton:
So you already thinking about the next deal to do?
Clifford Stocks:
Thinking about the next one have identified some you know few companies programs that are being under resourced and trying to work with those companies to extract those programs very similar to the way that we did it with between ICOS and Calistoga, I structured that deal for win-win that if the program was successful everyone would win and no one felt like they lost anything.
Acquisition by Gilead
Fintan Walton:
Right, now why did the Gilead actually buy the company it didn't have to buy the company?
Clifford Stocks:
Well Gilead has been making a move into oncology and they've had a strong orientation for inflammation for sometime, of course their background and strength is HIV and Aids they've built their company around that, but recently the Gilead has acquired other companies in the last six months two other companies besides Calistoga to try to make a play into inflammation and oncology. And CGI [PharmaDeals ID = 36498] was one of those examples they paid about a 120 million for that company that was focused on kinesis and that was fairly early stage with those kinesis are gonna allow them to move into inflammation and into oncology and Calistoga was a fit there so they saw the fit clearly there was a fit and with respect to whether or not they had to buy the company Calistoga was on a track to make an exit for the investors and we were working on deals that were ex-North America partnerships, but if anyone wanted North America it was going to require them to acquire the company.
Fintan Walton:
Right, so in the future what's gonna happen to Calistoga Pharmaceuticals it's going to be absorbed into the Gilead or is that the idea or is it gonna still remain as an independent company?
Clifford Stocks:
It appears that way, we announced on February 22nd just recently the acquisition of Calistoga Pharmaceuticals by the Gilead, the deal was 600 million total deal dollars, 375 million upfront and 225 million in contingent milestones those are relatively near term and so and relatively achievable but based on success points of the compound moving forward.
Fintan Walton:
And it's all cash, it's all cash deal?
Clifford Stocks:
It is all cash, yes and while there where no negotiated guarantees for employees so no one is bound the team is very excited about CAL101 and the rest of the molecules in the portfolio and the team wants to stay with the Gilead. the Gilead has a facility in Seattle on South (indiscernable), the Gilead is located they are headquartered in Foster City in California however they acquired the Corus Pharmaceuticals [PharmaDeals ID = 23980] a few years back and have housed them in a five story building on Lake Union, I think Corus has may be takes up about three storeys they have plenty of capacity and space there, there are discussions ongoing with our employees about which ones would move over to the Gilead, so we are certainly hopeful that the key people from the Calistoga team will stay with the program and move into the Gilead facility and then we'll be able to build the larger team and be able to push CAL101 to the marketplace faster and broader to do more trials in different patient populations.
Clifford Stocks's perspective: Future of Biotech sector
Fintan Walton:
Now you've said you know you're already looking at the potential next potential project just in terms of you know you've been in this business for a while you've gone through the various companies that the ups and down of the biotech sector I suppose, how would you would you remain optimistic I mean is there still something that can be achievable to create a company and to sell it again into the future over the next five-years sounds still possible?
Clifford Stocks:
Well I think there is more need then ever for people to create innovation and create early stage companies. I am not sure it's possible to create a FIPCO or fully integrated pharmaceutical company anymore in the future, but that may not be the model there is plenty of commercial infrastructure in the world there is good regulatory infrastructure in the world through big large pharma the development capabilities of large pharma are astounding the ability that they can move a lot of patients very quickly. Innovation is probably the strength of entrepreneurs in the biotech industry and so I think there is a lot of opportunity for entrepreneurs to get an idea have it funded by venture or other sources and take it up to a certain point which is proof of concept to a proof of relevancy and then generally somehow put that in the hands of a larger pharmaceutical partner either in collaboration, few partnerships some times through licensing of territories, but I think we will see a lot more M&A people building an asset up to in the Phase II point and then selling it to pharma.
Fintan Walton:
And with that type of business model even if the IPO market came back is it still possible to do an IPO in the future?
Clifford Stocks:
It's possible to an IPO today for some, if you have a good asset people are getting IPOs done, we thought that we were probably a candidate to do an IPO we actually did talk to a lot of investors on Wall Street, we were talking to bankers, we were sensing that we were gonna get around a 250 to $300 million pre on an IPO and you know clearly the evaluation that we fetched under the acquisition was greater then that, an IPO in today's environment no longer guarantees an exit for the venture investors typically they have to follow the investment or hang on and wait until a future point in deflection when the evaluation is much greater, but there are opportunities to do IPOs today it's just much more depressed evaluations than what the assets are probably worth.
Fintan Walton:
Clifford Stocks, thanks for coming on the show.
Clifford Stocks:
Fintan, I appreciate it. Thank you.
Fintan Walton
Dr Fintan Walton is the Founder and CEO of PharmaVentures . After completing his doctoral research on the genetics of cell proliferation at the University of Michigan(US)and Trinity College (Dublin, Ireland), Dr Walton gained broad commercial experience in biotechnology in management positions at Bass and Celltech plc (1982-1992).
Clifford J Stocks
Chief Business Officer
Dr. Clifford Stocks , joined Calistoga Pharmaceuticals in March 2009 as Chief Business Officer. He brings more than two decades of experience in the biotech industry, including business and corporate development strategy and business practices. Mr. Clifford Stocks 's career includes 15 years at ICOS Corporation, where he served as an Executive Officer and Vice President of Business Development. While at ICOS , he led acquisitions and joint venture activities as well as alliance formation, strategy, licensing and deal making. He played an instrumental role on the leadership team that developed and launched Cialis, and was a key architect of the LillyICOS Corporation joint venture partnership leading to their $2.3 billion merger in 2007. Previously, he was a management consultant in the Health Services practice of Booz, Allen & Hamilton. Mr.Stocks also serves on the Board of Sinova Pharmaceuticals Inc, a biotech startup in Shanghai, China. His career includes academic research in the department of immunology at the University of Utah and the department of molecular genetics and cell biology at the University of Chicago. Mr.Stocks received a Master of Business Administration degree from the University of Chicago. Graduate School of Business, and a Bachelor of Science degree in biology from the University of Utah.
PharmaVentures
PharmaVentures is a corporate finance and transactions advisory firm that has served hundreds of clients worldwide in relation to their strategic deal making in the pharmaceutical, life science and healthcare sectors. Our key offerings include: Transactions / deal negotiations; Product / technology valuations; Deal term advice; Due diligence & expert reports; Strategy formulation; Alliance management; and Expert opinion for litigation/arbitration cases. PharmaVentures provides the global expertise to ensure our clients generate the highest possible return on investment from all their deal making activities. We have experience of all therapeutic areas and can offer advice on both product and technology commercialisation.
Calistoga Pharmaceuticals
Calistoga Pharmaceuticals is dedicated to developing targeted therapies to improve the health of patients with cancer and inflammatory diseases. Calistoga Pharmaceuticals has a portfolio of proprietary compounds selectively targeting isoforms of the PI3K pathway. Calistoga Pharmaceuticals's lead product candidate, CAL101, is an oral, deltaisoform-selective PI3K inhibitor. CAL101 has demonstrated very promising singleagent anti-tumor activity in patients with hematologic malignancies. The Company is currently planning registration-enabling trials for CAL101. In addition, Calistoga Pharmaceuticals has a pipeline of isoform-selective PI3K inhibitors that may have utility as treatments for malignant and inflammatory diseases. Calistoga Pharmaceuticals is a private company headquartered in Seattle, Washington.