Nerio Acquired In $1.3B Deal

LA JOLLA – Nerio Therapeutics, a La Jolla-based biotech launched by Avalon BioVentures, has inked an acquisition deal with German drugmaker Boehringer Ingelheim.

The privately held biotech firm has a chance to earn up to $1.3 billion if certain milestones are met, according to the two companies. The total upfront payment was not disclosed.

The collaboration provides the pharmaceutical giant a slate of “preclinical drug candidates” which aims to serve as a key centerpiece to its pipeline of its immuno-oncology drug portfolio. 

“We believe Nerio’s small molecule PTPN1/N2 inhibitors have superior drug-like properties and provide a first-in-class opportunity,” said Sanford Madigan, co-founder and CEO of Nerio Therapeutics.

“We are excited to expand Boehringer Ingelheim’s pipeline and commend their commitment to unlock the full potential of our compounds and their mechanistically unique approach to fighting cancer,” said Madigan.

Founding Team

Nerio Therapeutics was co-founded in 2019 by three life science executives and had a total of nine employees at the time of the acquisition. 

The founding team include Madigan, who served as CEO, co-founder Jason Roland who led as vice president of chemistry and drug discovery, and Sergio Duron, who worked as Nerio’s chief scientific officer and co-founder. 

The trio all bring a decade-plus of experience advising and growing early-stage biotech startups. Many are incorporated and incubated under Avalon BioVentures, a privately held venture capital firm that closed a $135 million fund two years ago.

“We had a dedicated syndicate, led by Avalon, and a fantastic team at the Avalon BioVentures accelerator, that supported the Nerio team through several approaches for discovery of interesting phosphatase modulators,” said Madigan. “Generating compelling data around our development candidates led to a competitive situation that included multiple pharma looking at potential acquisition and several VCs suggesting they would lead a large financing round to support internal clinical development.”

Compelling Drug Pipeline

Nerio’s scientific team hunted the academic and industry literature for opportunities that might benefit its pipeline, according to the firm.

“We tried various approaches including HTS, structure-based design and protein degraders,” said Madigan. “When we started exploration of the PTPN2 space and hit on compounds with superior bioavailability compared to others in the field, we knew we had a valuable chemical series.”

Nerio’s small molecule drugs are designed to block enzymes known as PTPN1 and PTPN2 that break the body’s immune response to tumors.

Checkpoint inhibitors aimed at the proteins PD-1, PD-L1 and CTLA-4 have transformed treatment for many tumors, but drugmakers haven’t been as successful outside of those targets.

Targeting such “immune checkpoints” has animated much of cancer research and development over the past decade, with mixed results. 

Madigan credited the acquisition of Nerio Therapeutics to its early investors who helped finance the company before it was able to establish clinically validated pipeline of drug assets.

“None of this happens without a world-class scientific team and the confidence and financial support of our venture syndicate,” said Madigan, who is helping scale two new companies as well as serving as president and chief business officer of Enlaza Therapeutics. 

Those investors include Avalon, Bregua Corporation, Alexandria Venture Investments and Correlation Ventures.

Mega Exits in San Diego 

Since its inception, Avalon Ventures has pumped some $750 million into early-stage startups in both the life science and tech sectors. 

In 2022, it spun out its biotech team into a new entity, Avalon BioVentures, that’s focused solely on investing in life-science startups. Others on its leadership team include Jay Lichter, managing partner and Tighe Reardon its chief financial officer.

Mike Krenn, president and CEO of Connect which maintains relationships with over 400 venture firms across the U.S., said Avalon has played a monumentally important role in San Diego’s growth across the life sciences sector.

Notable exits include Synthorx, which was acquired by Sanofi in a deal valued at $2.5 billion. It also had stakes in Calporta, which was acquired by Merck for $576 million, and Janux Pharmaceuticals, which raised $194 million in a public stock offering in 2021.

“They’ve been here for 30 plus years,” said Krenn. “In that time, Avalon has invested in some uniquely early-stage ideas, they’ve started companies, and most importantly they’ve funded and syndicated with other top tier venture firms, bringing them into San Diego.”

Krenn also noted that when Avalon succeeds, “San Diego also succeeds,” adding that the region is fortunate to have them based here locally.

Nerio Therapeutics
Founded: 2019
CEO: Sanford Madigan
Headquarters: La Jolla
Employees: 9
Business: Developer of tech for drug discovery for immunotherapy.
Notable: Avalon Ventures has invested over $750 million into early-stage startups.