Q&A with Bill Gerhart

I develop new therapeutics to relieve human suffering associated with debilitating, life-threatening respiratory diseases. This became my personal mission about 17 years ago when I was asked by an investor group to help rescue a struggling biotech startup. Although I made the recommendation to shut this company down, I did identify an opportunity in the science that I thought could be a real winner. Based on this opportunity, I formed Mpex Pharmaceuticals and eventually developed a new inhaled antibiotic therapeutic for cystic fibrosis (CF) patients, which is now approved and on the market.

I realized that the new drug I helped develop for CF patients at Mpex represented a way to significantly reduce the risks of pharmaceutical development. The new drug we developed for CF patients was actually a previously approved oral antibiotic that we reformulated for delivery with a proprietary aerosol device to treat a debilitating lung disease. This model of repurposing an old drug for a new disease is a lower cost and lower risk path to a significant product opportunity, providing investors with the potential for an early exit and a significant multiple on invested capital…biotech returns without biotech risk. For example, after Mpex I founded Elevation Pharmaceuticals, a company for which I raised $40 million in 2010/11 to repurpose an old IV drug for inhalation to treat chronic obstructive pulmonary disease (COPD). We successfully completed Phase 2 studies and sold the Company in 2012 to a large Japanese pharmaceuticals company for $430 million.

Patara is a clinical-stage biopharmaceutical company dedicated to significantly improving the lives of pulmonary fibrosis and lung cancer patients suffering from chronic cough, a $3 billion total addressable market in the U.S. Our lead drug candidate, PA101, is a previously approved drug that we repurposed for inhalation using our proprietary aerosol device. Based on promising Phase 2a results, we are now initiating a Phase 2b clinical trial to identify the optimal dose for Phase 3 studies – a very significant value creation point in pharmaceutical development (i.e. $500M - $1B).

It can be debilitating for patients with a progressive and often terminal disease. About 75% of patients with pulmonary fibrosis and lung cancer suffer from a dry non-productive chronic cough with a frequency of up to 100 coughs or more per hour on average. This condition is refractory to currently available therapies, causes laryngeal and chest pain, headaches, vomiting, dizziness, incontinence and other symptoms, making it difficult to perform normal daily activities. And because people treat those with a chronic cough like lepers due to fears of catching a communicable disease, these patients also suffer from psycho-social complications such as anxiety, depression, and fear due to their isolation. Chronic cough can destroy quality of life.

We are the first to demonstrate a therapy to be potentially effective and well-tolerated for treating chronic cough in pulmonary fibrosis patients, and to our knowledge there are no other clinical-stage programs in development for this indication. Our closest “competitor” is a drug candidate acquired by Merck last year for $500 million upfront and $750 million in milestones based on Phase 2 results for treating chronic cough in people with no underlying respiratory disease…importantly, this drug candidate was not effective in a Phase 2 trial for treating chronic cough in pulmonary fibrosis patients. Historically, opioids have been commonly prescribed to reduce cough, but given the nationwide epidemic of opioid abuse and related deaths, this option is becoming less available to patients.

We previously raised a $32 million Series A from a syndicate that included investors in my previous companies, life science CEOs, and family offices that funded drug and device optimization activities, preclinical toxicology studies, Phase 1 safety and pharmacokinetic studies, and a Phase 2 proof-of-concept clinical trial for treating chronic cough. We have demonstrated that our lead candidate is safe, well-tolerated, and efficacious for treating chronic cough in pulmonary fibrosis patients ($500-$800 million forecasted peak U.S. revenue). We have clear and supportive guidance from the FDA, robust IP and regulatory protection, and a team with proven execution skills.

We are now raising a $30 million Series B to complete a Phase 2b clinical trial and position PA101 for Phase 3 studies (all within the next two years), which historically enables M&A or an IPO at an attractive valuation.