May 24, 2018
Following Pfizer’s announcement to cut 600 of its 1,000 St. Louis-area jobs in 2009, several Pfizer executives, including Joe Monahan and Walter Smith, faced a difficult decision. They could relocate to the East Coast or they could look for new opportunities in St. Louis.
“Pfizer’s research facility was being relocated to Boston, and a number of people stayed behind and started Confluence,” Smith said. “The founders had ideas on how to create drugs for cancer and autoimmune diseases.”
Confluence Life Sciences, a drug development company focused on cancer and chronic inflammatory diseases, launched in 2010 and its subsidiary, Confluence Discovery Technologies, was founded in 2011. Confluence Discovery was set up to do contract research for pharmaceutical clients, said Smith, who joined the companies in 2011.
Confluence completed a Series A financing round in 2012 that included Mercury Fund, BioGenerator, Missouri Technology Corp. and Epidarex.
BioGenerator, the investment arm of BioSTL, and Missouri Technology Corp., invested $1.4 million and nearly $1.5 million into the company, respectively. Other investments included $3 million from Mercury Fund, $950,000 from Epidarex Capital, $110,000 from St. Louis Arch Angels and $50,000 from the St. Louis County Helix Fund.
In late 2016, Confluence started a conversation about teaming up on programs with some of the researchers at Aclaris Therapeutics, a dermatologist-led biopharmaceutical company based in Philadelphia focused on developing and commercializing therapies.
“They came to us to see if we could, or would be interested, in designing a drug for topical use for autoimmune diseases of the skin,” Smith said. “As those discussions progressed, they liked another one of our programs and wanted to pursue a collaboration with that, too.”
This collaboration went into 2017 and in the middle of negotiations for another program, Aclaris pulled it off the table and instead shared an acquisition offer. The deal was officially closed in August 2017, Smith said.
This was a major win for the company’s earliest investors, including BioGenerator.
“Capital returned from exits like Confluence allows BioGenerator to continue building new startups in St. Louis,” Charlie Bolten, vice president of BioGenerator, said. “For BioGenerator, our growth has to include successful exits and Confluence represents a transition to this next phase of the long-term plan envisioned by our founders.”
Confluence investors received $20 million upfront, equally split between cash and stock, and are eligible to receive up to $80 million in contingent payments upon the achievement of certain development, regulatory and commercial milestones, as well as potential royalty payments on drug sales.
“This came along at an opportune time and it just made sense,” Smith said. “It was a good business decision for us, and it was good timing.”
Since the acquisition, the company has increased the number of employees by 20 percent to 42 and had revenue of about $5 million in 2017, Smith said. Confluence, located in the Cortex district, is planning a move into a new space, which will take place around this time next year, he said. The company hopes to quadruple its space to nearly 20,000 square feet and stay in the Cortex district.