Tarsa Raises $28 Million Series B to Support Regulatory Filings of Oral Calcitonin

Privately held firm believes oral calcitonin will enjoy several advantages over other osteoporosis therapies – ease of use compared to calcitonin nasal spray and safety compared to bisphosphonates.

Planning to make regulatory filings for oral calcitonin at FDA and the European Medicines Agency toward the end of 2012, Tarsa Therapeutics Inc. raised a $28 million Series B round, announced March 16. New investor Foresite Capital led the round – joined by existing A round backers Novo AS, MVM Life Science Partners LP and Quaker Partners Management LP – and will place founder and CEO James Tananbaum on Tarsa’s board of directors.

Tarsa in-licensed rights to Phase III compound Ostora (recombinant salmon calcitonin) from Unigene Laboratories Inc. in 2009, planning to bring it to market as the first oral formulation of calcitonin for the treatment of osteoporosis in post-menopausal women [See Deal]. Novartis AG markets Miacalcin (chemically derived calcitonin) and Upsher-Smith Laboratories Inc. markets Fortical (recombinant calcitonin) – both are nasal-spray formulations of the compound.

Philadelphia-based Tarsa is more bullish than ever about Ostora’s market potential because Novartis announced earlier this year that as part of a restructuring and overall portfolio review, it was abandoning its own effort to develop an oral version of calcitonin (Also see "With Its Hypertension Franchise in Crisis, Novartis Restructures" - Pink Sheet, 13 Jan, 2012.). Recently conducted follow-on market research indicated that Tarsa can hope to pick up about 20% of new and existing post-menopausal osteoporosis patients when Ostora reaches the market, thanks also to diminishing use of bisphosphonate therapies caused by safety concerns, CEO David Brand said in an interview.

“We’ve done a lot of market research with Novartis terminating its program,” he said. “And in that study, the product would take up to 20% of new and existing patients and it would take approximately that percentage of the 2 million patients that either are on holiday [from bisphosphonates] or who have discontinued therapy. Utilizing those figures, the product has a peak sales range of within the area of $750 million in the U.S.”

Last year, Tarsa announced that Ostora had demonstrated non-inferiority and similar safety in a Phase II trial using Fortical as a comparator (Also see "Tarsa Completes Phase III For Oral Calcitonin In Osteoporosis, Plans 2011 NDA" - Pink Sheet, 14 Jul, 2011.). In the ORACAL study, Ostora demonstrated superiority to placebo and non-inferiority to the Upsher-Smith drug as measured by a primary endpoint of percent improvement in lumbar spine bone mineral density following one year of treatment. Tolerability measures were similar in all three arms of the trial.

The NDA and EU filing will be backed by a single Phase III trial for which various data are still being compiled and analyzed. Brand said Ostora demonstrated superiority to nasal calcitonin in that study.

The company is investigating the candidate further in a 120-patient Phase II trial in prevention of osteoporosis and maintenance of bone mass in post-menopausal women with low bone mass (osteopenia) and increased risk of fracture. Six-month data from that proof-of-concept trial are expected in late summer, but next steps in the prevention/osteopenia indication are unclear until FDA issues new guidance for osteoporosis/osteopenia drug development, expected in 2013.

Initially, Tarsa had hoped to file Ostora at FDA in late 2011, but additional data requests from the agency added to the timeline.

“What we wanted to do was collect all of the information and materials that we needed in terms of patient safety and efficacy,” Brand explained. “We had a very successful pre-NDA meeting with the agency and they asked us for some additional information which we have underway. That’s what moved the submission date to the end of 2012. There was no request for any additional trial work at all.”

Commercialization Partner Expected To Sign On This Year

Tarsa has been clear all along that it will need one or more commercialization partners in order for Ostora to achieve its market potential in the U.S. and Europe. Partnering discussions have only picked up since Tarsa gave a presentation at the JP Morgan Healthcare Conference this past January and an announcement should be coming in the near future, Brand said.

“We have a lot of options with respect to commercialization,” he said. “With the ORACAL study being as successful as it was and with bisphosphonates running into the kind of safety issues that they have over the past two years, we’ve had a great deal of interest from a number of companies. We’re looking at all of those options and whether it is a global strategic partnership or a regional partnership, and whether we maintain some co-marketing activities and rights, that all is on the table as this point.”

“I would anticipate potentially by late summer, we should be in a position to say more about our commercialization strategy and where we will be going,” he added.

Brand believes potential partners will be attracted by a clear-cut differentiation profile for Ostora compared to other osteoporosis therapies. A single, once-daily pill to be taken shortly before bedtime, the product will be much easier to administer than other formulations of calcitonin, he said.

“Compared to bisphosphonates, you would have a product shown to be very safe with 25 years of safety experience behind it, and also a product that is convenient since it’s given just before the patient goes to bed,” Brand noted. “It is not affected by food or water. And unlike bisphosphonates, the patient does not have to stand up for 30 minutes or worry about if they take it with milk they have zero bioavailability.”

Ostora also has been shown to maintain bone mass density, he added, and research indicates the drug offers a risk-benefit profile that will be attractive to both clinicians and patients.

Previously, Tarsa raised a $24 million Series A round in 2009, led by MVM [See Deal]. Brand would not comment on whether the Series B was an up round.