ElevateBio Gets $150M to Grow a Crop of Gene & Cell Therapy Startups

Xconomy Boston — 

When a biotech startup is ready to test an experimental therapy it faces a pricey choice: Should it make its drug in-house, or hire a contract manufacturer? The decision is particularly expensive for companies developing complex gene and cell therapies, which need to make large batches of engineered viruses to test their work.

A new Cambridge, MA, company called ElevateBio aims to offer an alternative path.

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ElevateBio is building a facility that is intended to manufacture experimental gene and cell therapies for multiple startups, and aims to invest in those companies and help them grow. The company has raised $150 million led by UBS Oncology Impact Fund and F2 Ventures to execute its plan. Co-founder and CEO David Hallal says that the ElevateBio site will be more efficient as a shared resource than it would be if it were owned by a single company.

“We get to build it once and then run multiple companies through it,” he says.

Startups developing chemical drugs often lean on contract manufacturers to make their products. But ElevateBio chief scientific officer Mitch Finer says contractors are too expensive for most cell and gene therapy startups. Gene and cell therapy products involve engineering viruses and filling them with genetic instructions. And for some gene and cell therapies, companies have to extract cells from a patient, modify them in a lab, and infuse them back into the body—a complex and costly process that can take weeks. Finer saw this firsthand as the chief scientific officer of cell and gene therapy developer Bluebird Bio (NASDAQ: BLUE), which built its own manufacturing capabilities. Last year, it reported $448 million in research and development expenses alone.

The need for gene and cell therapy manufacturing expertise has grown considerably as these cutting edge treatments have progressed forward. Multiple gene and cell therapies are now approved in the US and Europe, and many more are in development. The FDA, for instance, could approve the spinal muscular atrophy gene therapy Zolgensma, from Novartis (NYSE: NVS), this month. Others for hemophilia, beta-thalassemia, Duchenne muscular dystrophy, and more could follow.

Biopharma is investing heavily in gene therapy’s future: Roche, Biogen (NASDAQ: BIIB), Johnson & Johnson (NYSE: JNJ), and Pfizer (NYSE: PFE) have all bought gene therapy assets this year. What’s more, two contract manufacturers who specialize in gene and cell therapy work, Paragon Bioservices and Brammer Bio, have both been acquired since March. Upon buying Paragon for $1.2 billion, Catalent (NYSE: CTLT) estimated that the addressable market for gene therapy tools is worth $40 billion, and “is expected to have sustained growth of 25 percent in the medium term.”

ElevateBio is trying to capitalize on this momentum by meeting the manufacturing needs of startups. It is currently building a 100,000 square-foot complex in Waltham, MA, that it calls BaseCamp (pictured above). The site, which is still under construction, will be capable of manufacturing both gene and cell therapies, Finer says. BaseCamp will be able to support several companies, though Hallal wouldn’t say how many it can house at one time. Finer adds that the facilities will meet quality control standards and the requirements of US and European regulations.

But ElevateBio isn’t doing this just to be a contract manufacturer. It will operate as a holding company that invests in nascent cell and gene therapy startups spun out of academia. Hallal says his team is already talking with scientists at universities in the US and abroad about bringing their early gene and cell therapy work into ElevateBio.

ElevateBio’s plan is to nurture these startups until they progress, get more private financing, or go public, Hallal says. Each startup that leaves the nest will clear the way for a new company. The goal is to spark a cycle of gene and cell therapy companies being created, grown, and spun out of the Waltham space, Hallal says.

ElevateBio’s Waltham facility is expected to become fully operational in the second half of next year. But Hallal says startups can start working with the company sooner. Right now, it has lab space in Cambridge.

EcoR1 Capital, Redmile Group, and Samsara BioCapital invested in ElevateBio along with UBS Oncology and F2. Before emerging from stealth, ElevateBio was incubated within MPM Capital, where both Hallal and Finer are executive partners.

Photo by ElevateBio