Thallion Pharmaceuticals: A Merger Gone Right

---

By Shawn Lawrence

“Contrary to the horror stories you sometimes hear about mergers, ours has worked wonderfully from the day we made the decision,” states Segal maintaining it’s business as usual’ albeit on a larger scale.

Thallion was formed in March 2007 from the amalgamation of Ecopia BioSciences Inc. and Caprion Pharmaceuticals Inc. The merger was a rare one of two healthy, if still unprofitable, biotech companies, with common ideas and common goals. The ease in which the two companies completed the amalgamation was helped along by the fact that its respective plants were actually physically within only a couple hundred yards of each other.

The end product was the creation of a slightly larger company with a focus on the development of new treatments for underserved markets in the areas of oncology and infectious disease. The merger capitalized on the strengths of both companies, and the aftermath of this particular merger was good for both sides.

The new company had a pipeline that was farther along then most startup companies of the same age and it was put into the enviable position of having reached a Phase II clinical trial before the company itself had even celebrated its first birthday.

Segal, who served as president and CEO of Caprion Pharmaceuticals, took on the role of CEO of Thallion Pharmaceuticals, and Pierre Fallardo, then CEO at Ecopia, became COO. Today, the two men are well settled into their respective roles, doing what they do best.

“Pierre is a world class pharmacologist whose long suit was always excellent science and scientific operational management while my background is business,” explained Segal. “I’m not a scientist but I see my job as providing a vision and direction for the team and making sure that this vision is communicated throughout the building and out to all of our external constituencies.

So when we decided together that the right thing to do was to merge the companies, it was a very easy decision that as the business guy with no training in science I would take the helm as CEO and Pierre would be COO.”

Segal adds that the merger helped both men and their respective companies in other ways as well.

“You don’t have to look very far to find people to tell you that there are too many small companies with single dimensional risks in Canada and elsewhere. Ours was as much a merger of convenience as it was a strategy. In a word it was about scale.

We knew that both companies were really focused primarily on cancer, although we had an additional product in infectious disease. We just felt that together, the whole was more than the sum of its parts,” he said.

Segal says it was also fairly easy for both men to familiarize themselves with their new situations and their new roles. Among the first steps taken by the new management team involved the company taking steps to divest itself of all of its proteomics assets from its Caprion days.

“We thought that this was a great way to prime and pump our drug development engine and I think that’s playing out to be the case because a lot of our core drug development team was built around that first product and we ultimately diversified beyond that,” explained Segal.

Thallion’s first product candidate is Shigamabs®, a dual antibody product for the treatment of Shigatoxin-producing E.coli bacterial infections. Thallion also has two oncology products, CAP-232 and ECO-4601. CAP-232 is a peptide with broad applicability in several oncology indications that has completed an initial Phase II trial. ECO-4601 is a small molecule with broad applicability in several oncology indications, which is currently in the late stages of a Phase I/II trial in multiple cancers.

“The idea of having more and more compounds under a single umbrella just makes good common sense in leveraging our shareholders capital for more shots on goal clinically and that was the premise behind the creation of Thallion,” said Segal adding that the reason Thallion’s product portfolio delves into both oncology and infectious disease actually has to do with the technology it divested itself of.

“Caprion had been doing a lot of proteomics work in the domain of infectious disease. It led us to a partnership in E-Coli where we ended up licensing these antibodies from a US company who had developed them. We saw the opportunity to develop products that were aimed at a completely underserved niches, where kids were dying every year without any therapeutic options,” he said.

Segal doesn’t think the two programs are as far apart as others might believe and argues that there are in fact many companies out there with both oncology and ID programs.

“What unites all of our products is that they are all addressed against underserved markets, in areas where there’s a real commercial need and opportunity in the market. That works in our favour, and similarly allows us to work in the best interests of the market we serve. I think collectively we have a depth clinically that neither of us could’ve had alone,” states Segal. “We’re in a business where shots on goal matter because a lot more things fail than succeed, no one likes to talk about it but it’s the reality of this business. Knowing that I have three ways to go out there and win allows me to sleep well at night.”

According to Segal, the shigamabs program against Shiga toxin associated Toxemia is getting set to enter into a Phase II/III pivotal trial, and the company could be in a position to file with DOA in 2010 or 2011.

“That’s very near term and a great trajectory for a late stage drug, and that is something we are very proud of, especially when you consider the quality and quantity of our clinical candidates,” he said.

Although Thallion is based in Canada it has conducted trials all over the world including in France, Eastern Europe and the U.S.

“We do our trials wherever it makes sense,” Segal states. “It’s not so much about cost, rather it’s about picking the right people to do the trials, about getting the right patients and about finding the right environment.” The company’s head of development happens to also be a Swiss National.

While Thallion has come a long way in its development in a short time, Segal is cautious about letting the company rest on it laurels. It still has much to do especially in terms of raising money.

“I think in this business you can never raise enough money and it’s not a success until you’re marketing a product. Deliver the results though and it’s amazing how quickly you can get the cash. That’s what we’re trying to do,” says Segal. “We do have an abundance of riches, but no-one’s declared victory here. We’re hard at work getting our programs to the next logical clinical stage and making sure we can do so in a fashion that’s responsible. Sure its been great to be able to assemble this many assets in a company of our size and stage, in the long run we’ll be judged by how well our portfolio does clinically and we can live with that kind of judgment.”