RAVen’s Project Condor fights flu with Cidara deal

Cidara Therapeutics announced yesterday that RA Capital is leading an investment in the company to fund the reacquisition of CD388, a clinical-stage, long-acting antiviral for flu that we believe may have significant benefit for patients. We are proud to lead Cidara’s pivot to become a company focused on the clinical development of a truly impactful infectious disease program. 

The road to this investment has been long and complicated. Along the way, we learned much more than we ever expected about the legal and technical aspects of multiparty transactions involving multiple public companies and multiple potential investors and relied on the expertise and efforts of a truly amazing number of people across the firm. Cidara is the first of what we hope will be many such investments under our new approach to identifying and licensing on-the-shelf assets from biotech & pharma companies, which we call Project Condor. But first, the story. 

Cidara had licensed CD388 to Johnson & Johnson in 2021. But last summer J&J decided to divest certain assets from their infectious disease division as part of a broader portfolio reshuffling. Our TechAtlas and the Infectious Disease Teams sprang into action. We tasked a half-dozen Associates – in RA parlance, a ​“swarm” – to work together to analyze everything we could learn publicly about the portfolio, triaging the opportunity down to a small number of programs we felt we could form a company around. 

CD388 stood out. The drug is a long-acting flu prophylactic intended to be dosed once at the beginning of flu season and would protect even people who don’t have the robust immune system required for vaccines to work well. Vaccines are great, but fundamental challenges with flu vaccine development (seasonal strain selections, timelines) have confined us to a world where vaccines will only be of limited efficacy for the foreseeable future. The more novel (and dangerous) the strain, the less likely vaccines are to be acutely effective. There is a real and urgent need for better flu prophylaxis and therapeutics – even more pointed this month with the rise of H5N1.

We saw an opportunity to supercharge this effort with CD388. Due to its mechanism of action, CD388 could work to protect us from these more pathogenic flu strains like avian flu. The ​“active” element of CD388 is an effective inhibitor that has proven efficacious in the treatment of all types of flu infections and for short term prevention in community settings. With funding from J&J, Cidara had generated compelling Phase 2a human challenge data showing that when administered preventatively, CD388 could protect healthy volunteers exposed to a very high dose of influenza from getting sick. 

The program was also compelling because Vir Biotechnology had recently run a Phase 2b clinical study for their own long-acting antiviral candidate. Vir’s drug relied on a different mechanism of action, and when their trial failed, the company lost ~$1B in market cap, teaching us that others should value positive data for a new long-acting flu prophylactic.

And interestingly, RA Capital had actually invested in Cidara nearly ten years ago when the technology behind CD388 was deep in their pipeline. At the time, we primarily invested because of Cidara’s more advanced antifungal programs, but we tracked the CD388 program over the years. Last year, when we learned that J&J planned to spin it out, it wasn’t immediately obvious to us that bringing CD388 back into Cidara might be an optimal solution until we considered the development path, speed, team, and royalty stack.

Often when we embark on an out-licensing project, we’ll look to set up a new company that will acquire the asset – and we have a strong group of entrepreneurs and C‑suite execs in our RA Ventures incubator, RAVen, who act as advisors and who are in position to step in as interim or long-term management. We are well equipped to move nimbly and flexibly to stand up an operating company that can advance the development of programs or platforms without delay. However, in this case, we had the additional challenge of flu season to contend with as we planned how CD388’s future development would unfold. 

Flu has particular development challenges, which our Infectious Disease team helped us understand. Unlike other diseases, where a two-month delay in starting a clinical trial leads to – you guessed it – a two-month delay in generating data, the seasonal nature of flu means that a two-month delay could cost you six months if you need to wait for the next hemisphere’s flu season, or even twelve months if you have a specific geography in mind. We knew we had some of the right folks around the table at RA, but also knew it would be difficult (if not impossible) to stand up an entire management team and Clin Ops organization in time to start a clinical study as a NewCo during the 2024 – 25 flu season in the Northern hemisphere. 

Finally, we knew that the existing agreement between J&J and Cidara might make things complicated for a small VC-funded biotech looking to license the drug (for example, what might the licensing fees be to Cidara on top of the licensing fees to J&J?).

Accelerating the process

Shortly before the initial bid deadline, we connected with the team at Cidara, initially to learn from their experience in developing CD388 so far. However, we quickly realized that the best way to move CD388 forward quickly and efficiently would be to partner with them – after all, they were the company that originally developed the drug. The Cidara team knew the molecule inside and out, had run all of the clinical studies to date, and were the only group that we believed could get CD388 into Phase 2b in 2024 (tech transfer alone would have taken months!).

As we moved into diligence and further negotiations with J&J (we were certainly not the only bidder), we knew this effort would require significant capital, and it would be important to have the right group of investors alongside us. We therefore quarterbacked one of the most complicated diligence processes I’ve ever encountered – coordinating Q&A with J&J for multiple potential syndicate partners who were with us in the data room, plus the Cidara team. Let’s just say there were a lot of spreadsheets!

We partnered with Cidara’s management team – particularly CEO Jeff Stein, COO/CLO Shane Ward, and CFO/CBO Preetam Shah – and over the next several months completed technical diligence, built out a clinical development plan, negotiated a license with J&J, and syndicated a concurrent PIPE to fund CD388 through Phase 2b with strong support from our coinvestors Bain Capital Life Sciences, BVF Partners, and Canaan Partners.

We knew that clinical study design was absolutely critical – we’d seen Vir’s trial fail in 2023, and although their drug’s mechanism was very different, we knew we could learn from their design. So we brought in expertise from our TechAtlas team, led by our Head of Infectious Diseases, Mario Barro (who led Influenza projects at Sanofi and BARDA); sat down with our Blackbird clinical development Center of Excellence; and enlisted a variety of consultants to help Cidara refine the study.

To hit our 2024 clinical timeline, we also knew we needed to get CD388 into Cidara’s hands as quickly as possible. Typical pharma licensing negotiations take months from term sheet to definitive docs (not throwing stones; that’s just reality!), but we made a compelling enough bid to J&J that they were willing to work towards our very aggressive timelines (thank you!). Working with expert negotiators like our Venture Partner Emily Minkow allowed us to reach a great outcome for everyone around the table.

Taking flight with RA

But Cidara isn’t just an investment. It’s the first fledgling to fly the nest of Project Condor. We’ve now pressure tested this systematic process for building companies around assets spun out from pharma. We’ve made several such investments in the past (like Sionna and Aliada), but those spinouts were ad hoc. With Condor, we’ve taken what we learned from those experiences to be more efficient. Cidara is Condor’s first flight, and there will be more. With the critical mass of people, skills, and capabilities we have now assembled internally at RA and RAVen, we are now well positioned to capitalize on this approach, especially at a time when P&L budgets are tight across the industry. 

(Side note: Why is it called Project Condor? The incubator run by our RA Venture team is called RAVen, which lends itself to a really cool logo thanks to our awesome graphics team. RAVen is a systematic platform for building NewCos. So later, when we wanted to incubate a company that would be a systematic platform for accelerating companies’ clinical trials, we called it Blackbird. Now we’re kind of locked into the bird theme and have a long, ranked list of names.)

Now that Cidara has flown the Project Condor nest, Blackbird is in the wings to help with accelerating the Phase 2b if needed. At this point, we aim to have a bird for everything.