Before Michael Gilman founded Cambridge, MA-based Stromedix in 2007, he headed up Biogen Idec’s research organization for five years. So today marks a reunion of sorts, with Biogen (NASDAQ: BIIB) announcing that it will buy Stromedix—which is working on treatments for fibrosis and organ failure—for $75 million. The deal also includes potential milestone payments of up to $487.5 million.
Stromedix was founded within Atlas Venture, where Gilman served as an entrepreneur in residence. Peter Barrett, a partner at Atlas, recalls that Gilman started with merely an interest in fibrosis, particularly idiopathic pulmonary fibrosis (IPF), which is a form of lung scarring that is almost always fatal. “It was a huge unmet medical need, and a lot of companies were not focusing on it,” Barrett says. So Stromedix licensed a compound from Biogen and began developing it in IPF. “Biogen had been exploring it in fibrosis, but it fell off the priority list,” Barrett says. “It’s coming full circle now.”
That fibrosis compound, called STX-100, is about to go into Phase 2 clinical trials. Barrett says Stromedix had been talking to potential pharmaceutical partners, most of whom wanted to see the trial results before jumping into any deal. Then Biogen came knocking. “They approached us and said they were interested in taking this compound back,” Barrett says. Barrett observes that ever since George Scangos became CEO of Biogen in June 2010, the company has strengthened its focus on finding novel treatments for autoimmune disorders. “Not all forms of fibrosis are autoimmune, but it fits into that strategy,” he says.
In today’s statement announcing the deal, Douglas Williams, Biogen’s executive vice president of R&D, said, “We believe STX-100 has the potential to be a best-in-class therapy and is an excellent strategic fit with our focus on highly differentiated programs with the potential to make a real difference for patients.” He added that Stromedix had worked to identify biomarkers in early clinical trials, which will help inform future trials and increase the likelihood of success in getting the therapy to patients. More than 200,000 patients in the U.S. and Europe suffer from IPF, Biogen estimates.
Stromedix previously raised $29.4 million in two rounds of venture funding. Its other VCs include Bessemer Venture Partners, Frazier Healthcare Ventures, and Red Abbey Venture Partners. A year ago, the firm’s investors committed up to $15.5 million in debt to cover the Phase 2 trial. Barrett says today’s deal demonstrates the potential value of investing in biotech startups at a very early stage. With Biogen now financing the entire STX-100 development program, Barrett says, “the combination of the creativity of a startup and the resources of a larger company will hopefully make it successful for all of us.”