Eisai, with Oncology Group H3 Biomedicine, Doubles Down on Boston

Xconomy Boston — 

H3 Biomedicine is one of the latest experiments that hopes to revamp the way biotech drugs get developed, to save both time and money. Japanese drugmaker Eisai, which is bankrolling Cambridge, MA-based H3, is betting that a combination of $200 million in cash, access to scientific luminaries, and the support of Eisai’s global research and development organization will make H3 a productive source of new cancer drugs. It might also be an encore to one of Eisai’s recent cancer drug successes based on a discovery from a Boston-area lab.

Eisai isn’t the first large drug company to try to light a spark for new drug discovery by essentially creating an entrepreneurial startup. London-based drug giant GlaxoSmithKline has taken a similar approach with its Cambridge, MA-based subsidiary Tempero Pharmaceuticals, which has plucked founding scientists and technology from Harvard to develop new drugs for autoimmune diseases. And, more generally, Novartis, Pfizer, and Sanofi-Aventis have all been growing their research presences in the biotech-rich Boston area.

At least for Eisai, it is likely to be many years before it gets the results of its H3 experiment. Last month, Eisai revealed its pledge to provide $200 million in funding to H3 over the next 10 years, with plans to begin operations of the group this year. The company is now in the process of hiring scientists and staff for the H3 lab in Kendall Square. The idea is to create an atmosphere of entrepreneurial science, something that supposedly lean and mean biotech firms are known to foster. That culture is something we know Big Pharma companies have struggled to incorporate into their own R&D operations, which have failed over the years to generate enough new products to replace the older ones that are falling prey to generic competition.

Spiros Jamas, the president and CEO of Glaxo’s Tempero Pharmaceuticals, notes that there are some definite perks to operating as a biotech with the backing of a large drug company.

“There are numerous potential advantages to this business model,” Jamas says in an e-mail, “including creating a truly entrepreneurial culture [and] enrolling… [academic experts] as founders. He adds that such biotech groups benefit from “access to big pharma’s significant drug discovery resources,” while enjoying “autonomous and agile decision making.”

Of course, there are also skeptics. The numbers show that biotech companies haven’t been more productive in developing new drugs than their Big Pharma counterparts, Harvard Business School professor Gary Pisano said in a Forbes article published last month. “Unless a company can develop world-class science, these units will have the same poor track record as biotech,” Pisano told the magazine.

Kentaro Yoshimatsu, a chief scientist at Eisai who is serving as president of H3, says that one of great strengths of H3 is its relationship with Broad Institute researchers Todd Golub and Stu Schreiber through their roles as scientific advisors and founders. H3 aims to discover small molecule drugs that target weak points in tumors that have been uncovered through genetic studies of people’s cancers. Fittingly, both Golub and Schreiber are founders of the Broad Institute of MIT and Harvard, one of the largest genomic research centers in the world. Schreiber, an expert at synthesizing drug compounds to home in on disease proteins, has been a founder of numerous biotech companies such as Vertex Pharmaceuticals and more recently Forma Therapeutics. Golub, a fellow scientific founder of Forma, is an authority on the genetics of cancer.

Eisai has already had some success in generating new products from Boston-area research, Yoshimatsu says. Its oncology research group in Andover, MA—where Eisai employs 300 people—discovered the company’s drug eribulin mesylate (Halaven) that the FDA approved in November 2010 for aggressive forms of breast cancer. Yoshimatsu, one of the company’s original members of its cancer drug research group in Japan in 1987, was part of the team that took eribulin mesylate through clinical development. The Japanese drug company’s research group in the Boston area also dates back to the 1980s.

For now, H3 plans to hire a chief scientist to head research at its lab in Cambridge. The group expects to initially have 40 employees in April and could grow to as many as 75 workers at a later time, Yoshimatsu says. When I asked him how H3 would reward its scientists for a job well done (something that can bring researchers a fortune if they own stock in their biotech employer), the Eisai executive told me H3’s scientists will be given financial incentives based on their successes. Yet he declined to elaborate. He also notes that Eisai is willing to invest additional funds to develop potential drugs discovered at H3, and the company plans to support the biotech unit with labs it has around the world.

Regardless of whether Eisai’s biotech experiment succeeds in the long-term, the H3 deal appears to be creating new biotech jobs in the Boston area. It’s also another big endorsement that, even as Big Pharma companies (like Pfizer and Roche) shed thousands of workers globally, large drugmakers seem bullish on the future of their R&D groups in the Hub.