It’s not often that a biotech startup can go more than eight years without a big funding round, but Ensemble Therapeutics has been able to do so, thanks to some early success stringing together drug discovery partnerships. But with the Cambridge, MA-based company now churning out drug candidates of its own, its bills—and financing needs—are about to escalate.
Ensemble is best known for developing a library of synthetic macrocycles—molecules intended to combine the properties of small-molecule drugs and antibodies to access tough-to-reach biological targets—and using it to land industry partnerships with the likes of Alexion Pharmaceuticals, Pfizer, and Bristol-Myers Squibb. These were drug discovery deals; partners identified drug targets they were interested in, and Ensemble combed through its library to find macrocycles that might hit those targets in a meaningful way.
That strategy enabled Ensemble, founded in 2004 as Ensemble “Discovery,” to survive on $43.5 million in total equity financing, the last large $15 million chunk of which it collected in a Series B in 2007. CEO John Ripple (pictured) won’t say exactly how much revenue Ensemble has generated, by comparison, through its deals—just that it’s been “far in excess” of the equity the company has raised. The most recent infusion came last week when Ensemble hit an unspecified milestone in the Alexion (NASDAQ: ALXN) deal.
As with most any strategy, Ensemble’s approach has pros and cons. On the positive side, the company has been able to chug along on a relatively small investment (by biotech startup standards), generate cash without further diluting its investors’ stakes, and establish some credibility in the industry. But on the negative side, Ensemble is now 12 years old and hasn’t provided any investor returns, be it from an IPO or some type of merger or acquisition—all of its partnership dollars have been put back into the company. Additionally, by focusing largely on drug discovery deals, Ensemble wasn’t “placing bets on our own in-house targets,” Ripple says.
“Drug discovery is analogous to gambling, and we were essentially relying on our partners to place the bets and select the targets that we would pursue,” he says.
As a result, Ensemble, over the past few years, has begun picking its own targets and amassing a pipeline of potential drugs. The plan is to push them forward—possibly all the way into early human clinical testing—demonstrate some proof of their worth, and then form partnerships that are more lucrative than the drug discovery deals that got it started.
This strategy began with a deal on an oral inflammation drug inked with Novartis in 2013, when Ensemble was being run by Michael Taylor, now the CEO of another Boston-area biotech, Deciphera Pharmaceuticals. Ripple, a longtime biotech veteran who has led and sold other startups including Syntonix Pharmaceuticals (bought by Biogen) and Virdante Pharmaceuticals (acquired by Momenta Pharmaceuticals), aims to forge similar deals for a group of cancer drugs Ensemble’s now developing in-house. The goal is to get the company to the point that it would be a viable IPO candidate, an acquisition target, or maybe a merger candidate for a company that “has the development expertise” that Ensemble doesn’t.
“My job at this point in time is to make sure we’re building a business that would enable us to consider all of those strategic options,” Ripple says.
The company is targeting some pretty competitive and hot fields of research, like immuno-oncology and the ubiquitin-proteasome system, a garbage disposal system cells use to tag and trash unwanted proteins. The company has disclosed early stage programs targeting the enzymes IDO and TDO, which are thought to suppress the immune system’s response to cancer. It’s also going after a target called USP9x, one of many so-called deubiquitinating enzymes or “DUBs,” which are involved in a number of cellular processes.
Both of these efforts are early; Ensemble likely won’t begin its first clinical trial until “sometime next year,” Ripple says. And there’s plenty of competition out there on IDO drugs (Bristol-Myers, Pfizer, and Roche are among the players), which might be an important component of the combination regimens being advanced in cancer immunotherapy, and in DUB drug development (Forma Therapeutics, C4 Therapeutics and others) as well. Ensemble’s pitch is that it can apply the targeting power and precision of an antibody to a molecule small enough to get at targets inside cells. The purported benefit—which still has to be proven in clinical testing—would be drugs that could be delivered at higher doses and more safely, since they wouldn’t impact targets they’re not supposed to.
Conducting the clinical trials necessary to prove its technology’s worth will mean bigger bills for Ensemble going forward. No surprise that as Ripple says, the company’s first preference is to cut a deal to get a partner to help cover them. But if it can’t, it might finally be time, after all these years, to raise another round.
“These bets obviously increase in magnitude,” Ripple says.