Novartis Test Drives Biotech Startup Adimab’s Drug Discovery Engine

Xconomy Boston — 

Lebanon, NH-based biotech startup Adimab has grown the ranks of its Big Pharma collaborators, which are coveted for their deep pockets and other resources they bring to smaller firms. Swiss drug giant Novartis has inked a research agreement with Adimab to access the startup’s synthetic immune system of sorts that churns out potential antibody drugs.

Adimab has announced research deals with four of the largest drugmakers in the world— Merck & Co., Roche, Pfizer, and now Novartis—since June 2009. It’s also collaborated with one undisclosed firm. The payments these companies have made to Adimab made the three-year old startup cash flow positive for the first time during the April, May, and June quarter of this year, says company co-founder and CEO Tillman Gerngross, and he expects the company to be profitable for the year.

The financial terms of Adimab’s deal with Novartis aren’t being disclosed. The agreement is for Adimab to use its technology to discover antibodies that could be drugs against two undisclosed disease targets of Novartis’s choosing. Merck has also made its second milestone payment to Adimab in their collaboration.

Novartis has decided to give Adimab’s technology a try despite the fact that the drug behemoth in 2007 struck a potential $1 billion-plus deal with Germany-based MorphoSys to gain broad access to that biotech’s method for discovering antibody drugs. To Gerngross, Novartis’s willingness to give his firm’s technology a shot provides extra validation of its potential to vastly streamline the process of discovering antibodies. Which could shrink the time it takes drug companies to identify antibodies that have the potential to be valuable and life-saving drugs for cancer, inflammatory diseases, neurological disorders, and other illnesses.

“What you’re seeing in the antibody discovery space is that [companies] that thought they had everything and already made very substantial financial commitments in that area still see something in our platform that has made them do additional deals to get access to our technology,” Gerngross says.

It’s a good thing for Adimab. The startup doesn’t have any drugs on the market, and the firm doesn’t plan to ever develop one of the antibody drugs it discovers. Rather, the company has made money collecting research and milestone fees from the likes of Novartis. Big drug companies pay Adimab to use its technology to discover antibodies for them, and then its up to those companies to invest the big bucks on pre-clinical and human studies to drive the experimental antibody drugs that Adimab discovers toward the marketplace. Those companies have agreed to pay Adimab royalties on potential sales of drugs discovered with the startup’s technology.

Adimab’s synthetic immune system starts with genetically engineered yeast cells. When a disease molecule like a tumor protein enters this system, the yeast produce human antibodies to counter the foreign invader. The firm can cull the yeast cells that produce antibodies that bind with the disease molecule. From start to finish, Adimab has proven for both Roche and Merck that it can deliver antibodies within eight weeks. This is much faster than the six to 18 months that it can take biotech labs to discover potential antibody drugs with existing methods that involve more steps than Adimab’s yeast-based system.

Antibody drugs for cancer and other diseases are a fast-growing, $25 billion segment of the pharmaceutical industry, with big sellers like Roche’s rituximab (Rituxan) and trastuzumab (Herceptin). So Adimab’s potential to expedite a company’s advance into this hot market helped the firm rack up an impressive number of partnerships in about a year—even if Gerngross fell short on his prediction that his company would close two significant partnerships in the first quarter of this year and two more by June.

Nevertheless, Gerngross wasn’t shy about predicting that his company would begin landing even larger deals with Big Pharma beginning early next year. The deals would include bigger sums because they would offer drug companies broader access to Adimab’s technology than its existing agreements allow, Gerngross says.

To describe the planned evolution of Adimab’s drug-discovery partnerships, Gergross uses a car dealership analogy. “Right now we’re in the test-driving business. You pay us and you can drive the car for a day. If you like it, let’s talk about buying the car.”

Gerngross talks about Big Pharma “buying the car” with some experience. Merck bought his previous biotech startup GlycoFi, a developer of recombinant yeast technology, for $400 million in 2006. To back Adimab, Gerngross was able to attract many of his GlycoFi investors such as Borealis Ventures, Polaris Venture Partners, and SV Life Sciences. He’s also got OrbiMed Advisors and Google Ventures along for the ride in Adimab’s investor syndicate.

We’ll see whether Gerngross and the team at Adimab can steer these backers to another big investment return.

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