Case Study: Ception Therapeutics

Essex Woodlands made our investment in Ception based upon our belief that Ception’s antibody against interleukin 5 (anti-IL-5mAb) would eventually become both a clinical and commercial success.  This particular anti-IL-5 mAb was first developed by Schering Plough (SP), and SP had actually completed a Phase 2 trial of this antibody for the treatment of asthma.  In this particular asthma trial, the antibody failed to show any efficacy in that patient population, but the antibody was clearly safe and pharmacologically active (it bound and functionally inactivated its target well).  Ception and its management team wanted to then use this same antibody in a different patient population - children with oesinophilic esophagitis), and Ception then managed to license out the antibody away from SP. 

We (Essex) became involved with Ception after this licensing agreement was completed, and we led a significant private financing (~$75M) to fund a pivotal, registration trial of this antibody in pediatric EE (eosinophilic esophagitis—an infiltration of inflammatory eosinophlic cells in the esophagus which prevents normal eating).  The financing was also used to fund another Phase 2 trial in asthma—in a subset of asthma patients who had infiltration of eosinophil cells in their lungs (the original asthma trials by SP did not specifically stratify the patient population in this manner).  After the results of these 2 clinical trials (positive for asthma and somewhat ambiguous for pediatric EE), Cephalon decided to acquire Ception for roughly $350M in cash and potentially another roughly $500M in remaining milestones—to be paid upon approval of the antibody for various clinical indications in various parts of the world.  Subsequent to this acquisition by Cephalon, Teva then proceeded to acquire Cephalon.  Thus, the antibody now resides within Teva’s growing portfolio of drugs, and Teva is now evaluating the antibody in 4 different Phase 3 trials.  Results from these various trials should be made public during the next 2-3 years.  Hopefully, one or more of these Phase 3 trials will have a positive outcome, which in turn would lead to an approval of the antibody which would then trigger the milestone payments to us and other former Ception shareholders.