Jazz Bought One Epilepsy Drug. The Rest Just Raised $90M to Go It Alone

David Goldstein built a human-genetics program at Columbia University before he co-founded a small San Diego biotech called Actio. On a Friday in late October, he did something most founders never get to do twice: he started the same company again, with the same core team, under a new name.

The new company is Setara Biosciences, and it opens with $90 million in Series A money. The cash landed two months after Jazz Pharmaceuticals agreed to pay $820 million upfront, plus up to $500 million in milestones, for Actio.

Goldstein is Setara's president and executive chair, and he is clear about why he did not retire after the sale. "We didn't start all this to just sell everything for whoever is willing to buy it for a certain price," he said. A small, focused biotech, he argues, remains the best place to do early-stage drug work.

The spinout is not shocking on its own; biotech teams regroup all the time. The structure is the interesting part. Jazz bought the one asset it wanted, pre-negotiated a home for the rest, kept a minority stake, and left the original investors to fund what remained.

What Jazz bought, and what it left behind

Actio's lead program was ABS-1230, a small molecule aimed at the KCNT1 ion channel. KCNT1-related epilepsy is a rare developmental and epileptic encephalopathy that affects about 2,500 people in the United States. Most patients develop it in infancy, and many never reach normal developmental milestones. No FDA-approved drug exists for it.

An early proof-of-concept study showed meaningful reductions in seizures in children, and Jazz priced that signal at $820 million upfront. When the two companies signed in August 2026, Jazz wrote the second act into the contract: Actio would spin out a private company holding the programs unrelated to ABS-1230, and Jazz would take a minority position in it.

One molecule, two markets

Setara's lead asset is STAR-0871, formerly ABS-0871, a first-in-class oral small molecule that blocks TRPV4, an ion channel. Gain-of-function mutations in the TRPV4 gene cause Charcot-Marie-Tooth disease type 2C, an inherited neuropathy that damages motor and sensory nerves. Patients lose strength in the hands and feet and often develop vocal-cord and breathing problems.

The logic is genetic and direct. A mutant channel runs too hot; the drug pushes its activity back toward normal. "Take a mutant channel that's overactive and push its activity back down to, or below wild-type levels," Goldstein said. The target and the disease share the same gene, which is a cleaner story than most rare-disease programs can tell.

Actio already ran STAR-0871 through the healthy-volunteer portion of a Phase 1 trial. Setara plans a Phase 1b study in CMT2C patients, called THERON, in 2027, and a Phase 2a study in overactive bladder alongside it. The drug carries Rare Pediatric Disease, Orphan Drug and Fast Track designations from the FDA.

Those designations matter for a one-asset company. Rare Pediatric Disease status can lead to a priority review voucher, Orphan Drug status brings market exclusivity, and Fast Track opens more frequent regulator conversations. For a startup with a single clinical program, the paper is nearly as valuable as the cash.

Overactive bladder is where the math changes. CMT2C is a 2,500-patient market. Overactive bladder affects tens of millions of people in the United States, and current treatments leave many of them unsatisfied. TRPV4 sits in the bladder's urothelium, where it acts as a stretch sensor; a 2011 review of the channel described blocking it as a route to calming an overactive bladder. Setara's bet is that one molecule can serve a rare genetic anchor and a mass-market expansion.

The acqui-spinout template

Setara's cap table reads like a reunion. Deerfield Management, Canaan, Droia Ventures, EcoR1, Euclidean Capital and Regeneron Ventures all invested, and Jazz holds a minority stake. Most were already Actio backers. Goldstein brought chief scientific officer David Breckenridge and chief financial officer Cayce Denton with him from the old company.

Jazz's interest was easy to see. The company entered epilepsy in 2021 by paying $7.2 billion for GW Pharma and its drug Epidiolex, which brought in $292 million in the second quarter of 2026. ABS-1230 adds a genetically defined, high-unmet-need program to that franchise. The other Actio programs had no such home inside Jazz.

Pay attention to the mechanics. Large pharma increasingly buys single assets instead of whole platforms. When it does, the programs it does not want still need a home. The Actio deal shows one answer: sell the lead, plan the spinout in advance, keep a small stake, and let the original investors carry the rest. The team, the platform and the option value of the discarded pipeline all survive.

We believe that Actio's acquisition by Jazz validates the genetics-driven approach to drug discovery and development that underpins Setara.— Jason Fuller, partner, Deerfield Management

Whether the template spreads depends on price. A spinout needs a lead asset close enough to the clinic to justify a Series A, and investors willing to fund a pipeline that a larger buyer just declined. Setara has both: a drug past its first human safety test and a syndicate that already knows the science.

The endpoint problem

The risk sits in measurement. The mechanism, at least, has a clean genetic rationale. Epilepsy trials keep a simple scoreboard: count the seizures. Charcot-Marie-Tooth does not. The disease moves slowly and attacks nerves, voice and breathing at once, so a company has to define "better" before it can prove it.

"You have the question of what's the best way to assess the impact of the disease and whether therapy is improving it," Goldstein said. That is the sentence to keep in mind. A first-in-class drug with a strong genetic rationale can still fail if the trial measures the wrong thing.

Charcot-Marie-Tooth has a long history of failed trials, partly because the disease is slow and the endpoints are soft. Setara's genetic target narrows the patient population, which can make a signal easier to see. It also shrinks the pool of people who can enroll, and rare-disease trials are already hard to fill.

The overactive bladder study carries its own uncertainty. A mechanism that works in a rare channelopathy may not translate to a common condition with many causes. The Phase 2a will be the first real test of whether the rare-to-common leap holds.

What to watch

Does the acqui-spinout become a standard playbook?

Scenarios for Setara's next two years