Big Bucks, Tiny Bubbles: Ex-Biogen Exec’s Exosome Startup Nabs $80M

Xconomy Boston — 

Exosomes were once thought of as cellular garbage bins, bubbles filled with waste and shipped out for elimination. But a more sophisticated view of exosomes—and a better understanding of their biological role—has led companies to exploit their diagnostic and therapeutic potential.

The latest startup is Codiak BioSciences, which has just reeled in over $80 million in venture funding to pursue its view that exosomes are the key to treating a slew of different diseases.

Codiak is launching today in Cambridge, MA, with the backing of venture firms Flagship Ventures and Arch Venture Partners, Fidelity Management & Research, the venture arm of Alexandria Real Estate Equities, and the Alaska Permanent Fund, which is the state oil revenue fund that has also invested in Arch-backed startups Juno Therapeutics and Denali Therapeutics.

The group has hired Biogen’s former R&D chief, Doug Williams, to be Codiak’s president and CEO.

Codiak is building on recent discoveries over the past decade or so that exosomes are involved in much more than cellular garbage removal. They contain DNA, RNA, proteins, lipids, and other materials, and can not only exit cells, but enter them, dump their belongings, and effectively influence how the cells they enter behave (check out this feature from The Scientist for more). Codiak aims to exploit these insights to use exosomes as a tool to develop both drugs and diagnostics. On the drug side, it’ll load up exosomes with some sort of drug—an RNA-based drug, a small molecule, or otherwise—and deliver it to the body via injection. For diagnostics, this would mean isolating exosomes from body fluids—exosomes are found in all of them—and analyzing them for potential genetic signatures of disease.

Williams says Codiak will first try to make exosome-based drugs and diagnostics for pancreatic cancer, and should be in the clinic testing its first candidate next year. But he spoke broadly of the potential of the approach. Codiak, for instance, might use the exosomes from stem cells as a potential tissue regeneration treatment. It’s considering things like graft versus host disease, immunotherapy, and infectious diseases, Williams says.

“There is a huge opportunity here to move into an entirely new area,” he says.

Williams, who will speak at our Healthcare Summit in Boston today, is a well-known biotech veteran. His resumé includes companies on both coasts, both big and small—Seattle Genetics, Amgen, Immunex, ZymoGenetics, and most recently Biogen. He was ZymoGenetics’s CEO when the company was sold to Bristol-Myers Squibb for $885 million in 2010. A year later, Williams headed to Biogen (NASDAQ: BIIB) to run its R&D. He held that position until last July, when Biogen announced that he had stepped down to run a startup that, at the time, had no name.

“I began thinking about my desire to go back to my roots,” he says. “When you’re the CEO of a startup or a development stage biotech company, you never very far from the science and that’s how you spend a disproportionate amount of your time. I enjoy that.”

Williams says he was recruited by Arch partner Steve Gillis, who tapped him nearly 30 years ago to join Immunex in Seattle. He thinks Biogen’s pipeline, highlighted with drug candidates for Alzheimer’s, spinal muscular atrophy, and nerve regeneration in multiple sclerosis, gives the company solid prospects.

Investors aren’t as sure. Biogen’s share price has plummeted of late, thanks to some trouble with its core multiple sclerosis business and some hesitance by investors to bet on the high-risk, high-reward pipeline Williams helped create the past four years. And Biogen has announced layoffs and a restructuring to help support an emphasis on those drugs. Williams says he had a “great run” and it was the right time to leave.

“My view is, you always want to leave and go do something else when it feels like things are in good shape,” he says. Biogen was indeed flying high when Williams left. Shares were worth about $400 on July 10 when Biogen announced his departure. They’re now at about $280.

The scientific work at Codiak that hooked Williams came from a team led by Raghu Kalluri, the chairman of Cancer Biology at MD Anderson Cancer Center in Houston. Kalluri has been researching the ways in which exosomes can act as delivery vehicles not just for waste—as was once thought—but for a variety of drugs. Williams says, for instance, that Kalluri’s group will soon publish some data showing that they’ve loaded up exosomes with a certain type of RNA—he wouldn’t say which one—that can suppress the growth of pancreatic cancer in mice.

Exosomes are shed by every cell type in the body, including cancer cells. The idea that they might have more important functions than just trafficking trash isn’t new. In 2007, Jan Lotvall, who chairs the Krefting Research Center at Sweden’s University of Gothenburg, published a paper in Nature Cell Biology showing that exosomes contained genetic information in the form of RNA. Flagship acquired intellectual property related to this work last year and housed it in an entity that has become Codiak.

Yet Codiak wasn’t the first company built around exosomes. In 2008, in another study published in … Next Page »

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