The gap between basic biomedical research and drug development is often called the “valley of death,” where promising projects are stymied by a lack of funding. In New York, with a strong research community but sparse biotech venture presence, the problem has been more dire than in other urban biotech clusters.
But a NYU Langone Medical Center initiative, launched two years ago to bridge that gap, seems poised to bear fruit.
Two small startups have emerged from the initiative, but the most significant so far, with a Big Pharma acquirer already expressing interest, is called iBeCa Therapeutics.
Launched Wednesday, the company comes from the work of NYU School of Medicine professor Ramanuj Dasgupta. iBeCa is a subsidiary of what’s known as Allied-Bristol Life Sciences, a joint venture between Bristol-Myers Squibb (NYSE: BMY) and British investment firm Allied Minds. It’s an example of a “build to buy” startup; Bristol-Myers has the option to acquire the startups from the joint venture under prearranged terms, meaning one day iBeCa could be part of its portfolio. (Here’s more in Nature on the Allied-Bristol partnership.)
Bristol-Myers inks biotech deals all the time. The transaction is more notable for NYU Langone. It’s the most significant deal to come from its roughly two-year-old “office of therapeutics alliances,” a broad and unusual initiative by the university—in terms of its breadth and scope—to advance the drug discovery projects from its labs.
“We literally started this with a business plan and an account number, it took a while to basically lay pipe,” says the office’s director, Nadim Shohdy. “We’re now finally beginning to see the fruits of our labor.”
Many universities have technology transfer offices that bring faculty inventions to investors and companies. A number, like those at the New York institutions Weill Cornell Medical College and Rockefeller University, have special investment funds set aside to help move early research forward. NYU Langone has put together, says OTA associate dean Robert Schneider, something akin to a “virtual biotech,” a term applied to life sciences startups that outsource much of their functions.
Here’s what Schneider means. When Schneider and Shohdy noted a few years ago that drug companies were letting go thousands of workers—medicinal chemists and toxicologists, for instance—and outsourcing their work to contract research organizations (CROs) at a fraction of the cost.
Seeing how NYU Langone’s labs had a lot of research that could turn into drug projects, Schneider and Shohdy decided to lean on outside CROs as well. They formed the OTA in May 2014, and brought in investors (Accelerator Corp., SR One, Aisling Capital) and industry executives as advisors to help vet the academic programs and manage a pipeline of projects. The OTA’s website, like a biotech, shows a number of early-stage programs being developed in various disease areas. (Their names are NYU001, NYU002, and so on.)
Once an NYU Langone project has passed muster, it may already have a“champion in place” at a venture firm or pharma company for an eventual deal, Shohdy says. The OTA then puts its own money into the projects to derisk them—use its CRO network, for instance, to perform additional chemistry work and make better compounds, or accumulate the type of early data a pharma company or investor wants to see to buy in. (Schneider and Shohdy won’t say how big their budget is, only that it’s “substantial by anybody’s standards in academia.”)
With iBeCa, for instance, DasGupta had used grant money to identify early compounds that might affect the function of Wnt proteins, which are implicated in the progression of a variety of cancers. But DasGupta didn’t know how to make them more drug-like. The OTA asked outside medicinal chemists and other consultants to examine DasGupta’s work. It seemed promising, so OTA took over the project, put in its own cash to bolster the remaining grant money, and in six or seven months ended up with better compounds and new intellectual property. Interest came in from a number of different investors, Shohdy says, but the OTA pulled the trigger on a deal with ABLS.
“Our goal is only to de-risk projects to get to the earliest quality deal possible, and then get it off our books and focus on the other projects,” he says.
It’s taken a few years for the OTA to start making deals. In addition to iBeCa deal, the office helped found ENB Therapeutics, a New York startup based on Schneider’s work. (He’s also a scientific founder of ImClone Systems, PTC Therapeutics, and a few other biotechs.) ENB is raising cash to develop a melanoma treatment. Additionally, according to Shohdy, the OTA is finalizing a “major research collaboration” with a large drug company. And in the iBeCa deal, NYU Langone will get equity in the company and a mix of near- and long-term financial rewards if the startup progresses. Should all that flow back to NYU Langone, the OTA will have some more cash to throw towards its next crop of ideas.
“The better we do, the more money we bring in, the more projects we can support,” Schneider says.