Pliant Therapeutics Snares $100M Crossover Round

March 03, 2020

Targeting scar tissue that builds up and blocks the lungs and bile ducts, Pliant Therapeutics Inc. raised a $100 million round from giant Novartis AG and a band of crossover investors that will launch its marquee drug through mid-phase clinical trials and set up the South San Francisco company for an initial public offering.

Pliant's drug, called PLN-74809, is aimed at idiopathic pulmonary fibrosis (IPF), a fatal lung-scarring disease, and primary sclerosis cholangitis, (PSC) which affects the bile ducts and liver.

Both diseases have lots of competition. Galapagos NV (NASDAQ: GLPG), which Foster City-based Gilead Sciences Inc. (NASDAQ: GILD) bought into last year, has a large, late-stage clinical trial under way. Also, San Francisco-based FibroGen Inc.'s (NASDAQ: FGEN) antibody pamrevlumab is in a late-stage clinical trial. (FibroGen disclosed Monday that it will undertake a second Phase III trial.)

But existing approved drugs — such as Genentech Inc.'s Esbriet, which it got by buying Brisbane's InterMune Inc. in 2014 for $8 billion — have been disappointing.

Still, about 200,000 people a year in the United States are diagnosed with IPF, resulting in 40,000 deaths a year. The average age of diagnosis is 65. Pliant's other target, PSC, is believed to affect one in every 100,000 in the United States and Europe.

Pliant's drug — spun out of work by Dr. Dean Sheppard, Bill DeGrado, Dr. Hal Chapman and Bradley Backes at the University of California, San Francisco — targets two receptors known as integrins that help an extracellular collection of secreted molecules essentially stick together to create non-cellular parts of tissue. PLN-74809 blocks those integrins, stopping the growth of a protein called transforming growth factor beta, or TGF-beta, to prevent inflammation and stop the progress of IPF and PSC.

"It's like a master switch," said Pliant President and CEO Bernard Coulie.

With the Series C round, Pliant is pushing PLN-74809 into clinical trials in both IPF and PSC.

The Series C round was led by giant Swiss drug maker Novartis AG, but was joined by crossover investors Redmile Group, Farallon Capital Management, Cormorant Asset Management, Surveyor Capital and Logos Capital, hinting that Pliant is lining up an initial public offering.

Existing investors participating in the round were Eventid Asset Management, Cowen Healthcare Investments, Schroder Adveq, Menlo Ventures, SCubed Capital, Agent Capital and undisclosed institutional investors.

"The size of the round, plus the amount already available from Novartis, gives us more than enough cushion," Coulie said. "It gives us time to evaluate" an IPO.

Pliant in October received $80 million upfront from Novartis for PLN-1474, a drug targeting the liver disease called nonalcoholic steatohepatitis, or NASH. Novartis also agreed to cover the development and commercialization of up to three more Pliant drugs and fund Pliant's early clinical work on PLN-1474. Results from the first study of that drug in humans is expected mid-year, Coulie said, and then Novartis takes on the next phases of clinical work for NASH and liver fibrosis.

"That has a significant validating effect. It increased the appetite for investors," Coulie said. "Second, with the amount of cash put into the company, it's always easier to invest into a company with a lot of cash."

By covering development costs of a drug in a competitive and largely disappointing field of NASH drugs, Novartis removed a significant amount of cash burn off Pliant's balance sheet.

"We're so very focused on the orphan fibrotic indications track, and that strategically is appealing to new investors," Coulie said.