Flexion Therapeutics is a little company built on the idea it can steer through early clinical trials in a faster and cheaper way than a lumbering Big Pharma giant. Now the Woburn, MA-based startup, founded by a pair of Eli Lilly veterans, has secured backing from four major drugmakers to put the idea to the test.
The world’s largest pharma company, Pfizer, has agreed to pump in $9 million in venture financing to Flexion, bringing the startup’s total Series A financing to $42 million. Flexion is also announcing today that it has secured partnerships with U.K.-based AstraZeneca, Germany-based Merck KGaA, and one other unnamed drugmaker. The mission will be to run early-stage clinical trials on four drug candidates that have been sitting on the shelf at the bigger companies, to see whether they have potential to treat inflammatory diseases.
We first broke news on Flexion back in October when the company raised money from Versant Ventures, 5AM Ventures, and Sofinnova Partners. The biotech, which pronounces its name FLEK-shun, is, like the name suggests, focused on bringing drug candidates to a value-creating “inflection point.” Flexion’s founders, Mike Clayman and Neil Bodick, built their reputations doing that at an incubator in Lilly called Chorus. The model there, as with Flexion, was to take raw drug candidates and design fast, cheap, elegant experiments that would demonstrate they have what it takes to go to the later, more expensive stages of development.
Drug development, of course, is a horrifically inefficient, time-consuming, risky, and expensive business. An estimated one out of every 10 drugs entering clinical trials ever makes it all the way to FDA approval, and the development process takes a decade or more and costs more than a billion dollars on average—depending on whose figures you want to believe. Regardless of the actual math, pharma is crying out for ways to increase its batting average in clinical trials, and lower its costs. So Clayman and Bodick found plenty of interest in Flexion, and ultimately had “in-depth” talks with 10 major drugmakers from the U.S. and Europe, Clayman says.
“What we offered them was a track record that says we’ve done this before, and if they outlicense their products to us, they will be in good development hands,” Clayman says.
The plan is to take “de-prioritized” early phase assets of a pharmaceutical company and seek to turn them into diamonds in the rough. Sometimes these drugs have been put on the back burner because the pharma company dropped out of an entire disease category, or went through budget-cutting that forced it to place its bets on drugs in the more expensive, final phase of development.
Flexion isn’t afraid to make some pretty specific, and bold, claims about what it can do. Instead of investing three to four years and $15 million to $40 million in generating proof of concept for a new molecule, Flexion aims to use “compact experimental designs” to cut that time frame in half, while slashing the costs of proof of concept to as little as $3 million to $5 million.
The company only has six employees, and says it intends to do most of the work on its four drug candidates through contract research organizations. Flexion isn’t saying much specifically about the individual molecules it has obtained, but these molecules have a few things in common, Clayman says. They are targeting inflammatory diseases that represent unmet medical needs, they could be commercialized with a small and specialized sales force that a company like Flexion could build, and they are already in early clinical trials or on the verge of clinical trials, Clayman says.
The plan will be to run randomized, placebo-controlled studies at a range of doses to give Flexion a clear answer on whether a drug can truly generate the “proof of concept” data needed to run a pivotal Phase III program with confidence, he says.
The business model for Flexion is pretty malleable. The deals are structured in two basic ways, Clayman says. One essentially provides Flexion with full ownership rights. The other gives Flexion full ownership in the beginning while allowing the originating company a chance to opt-in later for co-development after a candidate reaches proof of concept.
Clayman wouldn’t disclose which companies got which terms. But in the latter deals, the big drugmakers are essentially getting “a cost-free option to look at proof of concept data” for molecules they invented, while giving up a “significant portion” of the ownership rights to Flexion. The first clinical trials to test these drugs should be up and running by the end of this year, with the first proof of concept data arriving by late 2011, Clayman says.
“Doing these deals and raising $42 million in our Series A is really a validation of our model and the value we think we can create,” he says.
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