NYCEDC Finally Puts Its NY Bio Fund to Work With $60M For HiberCell

Xconomy New York — 

It’s been a question posed for years by many around the New York biotech scene: What is going on with the New York City Economic Development Corp.’s $150 million biotech fund, which was formed in 2013 but hadn’t made an investment?

Finally, today, there’s an answer. A small piece of the money from the NYCEDC’s NYC Life Sciences Fund is going to an ambitious new startup called HiberCell, which is focused on routing out the small numbers of dormant tumor cells that lurk in patients in remission and turn into deadly, recurring cancers.

“This definitely took time, I think we’ll acknowledge that,” Doug Thiede, the Senior Vice President of Life Sciences & Healthcare at the NYCEDC, tells Xconomy. “But what we’ve also learned over time from our partners and others in the ecosystem is we want to focus on companies that will stand the test of time. We’re excited about this particular investment being one of those.”

HiberCell has raised a $60.75 million Series A round led by Arch Venture Partners, one of the two life science venture firms—along with Flagship Pioneering—to manage the NYCEDC’s biotech fund (Flagship isn’t involved with HiberCell). The startup, spun out of research at the Icahn School of Medicine at Mount Sinai, is the first biotech to set up shop in one of New York City’s newer startup spaces: the Hudson Research Center, which overlooks the Hudson River on the West Side of Manhattan. Its labs should open in April and will have space to fit upwards of 50 employees, says Alan Rigby, HiberCell’s president and chief scientific officer.

The startup’s emergence is noteworthy for a few reasons. It’s the first investment by the NYCEDC’s fund, which was launched to help spur the creation of new biotech companies in New York; $1.2 million of the round comes from the agency. And Rigby says HiberCell is the first company specifically focused on understanding and eradicating “dormant disseminating tumor cells,” or DTCs, an emerging area of cancer research focused on cells that break off from a primary tumor, hibernate in other tissues of the body, sometimes for years, and eventually “wake up” to form aggressive new tumors that often resist treatment.

“Patients don’t tend to die from their primary diagnosis,” says Rigby, a former Eli Lilly (NYSE: LLY) oncology executive. “They die from metastatic disease.”

HiberCell aims to find these cells and understand how they work and what their genetic drivers are. It wants to then develop drugs that either kill DTCs or put them into a deeper sleep, so that another drug can come in, finish the job, and prevent a patient from relapsing. The company was formed around the work of one of the field’s leaders, Julio Aguirre-Ghiso, who co-heads the cancer mechanisms program at the Icahn School of Medicine at Mount Sinai in New York.

The launch of HiberCell has been a long time coming for the NYCEDC. The quasi-governmental agency is focused on job creation in New York and teamed up with Celgene, Eli Lilly, and GE Ventures in 2013 to amass more than $100 million with the hope of forming 15 to 20 local life science startups by 2020. The fund was meant to support the longstanding, ongoing effort to boost the life sciences industry in New York, which has struggled for years to form the type of buzzing biotech ecosystem that exists in areas like Boston and San Francisco.

Despite some notable progress in the city—the arrival of startup incubators, the investment of $1 billion of city and state government life sciences funding, the launch of a few high-profile, well funded biotechs, and more—New York still lags well behind its rivals in getting venture dollars for startups. NYCEDC officials have acknowledged to Xconomy that it will “take a generation” for the region to catch up to its rivals. But it wasn’t supposed to take this long for its fund to begin investing in startups.

When it started its life science fund, the NYCEDC was on the hook for $10 million, with Celgene, Eli Lilly, and GE Ventures chipping in another $40 million, and a VC partner matching that total with another $50 million. But it took awhile to snare the right venture firms, and its communicated timelines have been pushed back multiple times. For instance, when the fund was first announced, the plan was to secure a VC partner by the end of 2013 and make the first investment in early 2014.

The fund didn’t tap its VC partners, Arch and Flagship, until early 2015. The two firms threw in more cash, bringing the total fund to $150 million. Sources told Xconomy in 2015 that there were specific incentives baked into the fund meant to keep its startups from leaving New York. (Rigby wouldn’t say if such incentives are tied to HiberCell’s funding, just that the company “desires” to stay and grow in New York.)

Even after the VC partners came on board, it took the fund another four years to make its first investment (Flagship has yet to announce a funding). In 2017, NYCEDC officials told Xconomy that its VC partners had been “establishing a presence in New York City and thoughtfully developing opportunities for ventures.”

When asked why the NYCEDC took so long to make its first investment, Thiede said it has taken time to choose and push forward the right company. “The expectations were re-calibrated once we got boots on the ground here,” he says. There are “more realistic expectations of what the right investments…and market signals are for New York City.”

Part of that recalibration involved a shifting investment strategy. At an Xconomy event in 2017, Flagship principal Jason Park, who runs the firm’s New York efforts, noted that Flagship planned to put the cash into “one or two transformational companies” rather than spread small dollars around into more than a dozen. Thiede says Arch has adopted the same type of vision as Flagship—to start a smaller number of high-profile companies.

The HiberCell round represents the culmination of a few local efforts. Aguirre-Ghiso won the 2016 BioAccelerate NYC Prize, a citywide competition run by the Partnership Fund for New York City to provide funding for biomedical research. Arch was one of the judges in that contest—a deliberate attempt by the Partnership Fund to get New York research on the radar screen of venture capitalists. Arch eventually formed HiberCell after Aguirre-Ghiso used that prize money to finance his work, says Maria Gotsch, president and CEO of the Partnership Fund. Arch’s presence pulled in the NYCEDC money as well.

“With any life science company in an emerging market, there are a series of pieces that have to come together,” Gotsch says. “This is where the pieces were connected a little bit more explicitly than in other situations.”

HiberCell’s ambitions are significant. Rather than trying to kill a primary tumor itself, as most cancer drugs do, HiberCell is forging a different path.

Even when cancer is seemingly wiped out by chemotherapy or other drugs, DTCs—single or small clusters of cells from the initial tumor that burrow into other tissues like the lung and bone marrow—can remain and stay dormant for months, even years. But when cancer returns and metastasizes—meaning, forms new tumors in other tissues—DTCs are a possible culprit. The challenge for HiberCell is to figure out what to do about these sleeper cells, but there are myriad challenges. Among them: How can we identify patients with these cells, find them, and isolate them? How do these cells interact with and evade the immune system? How can we wipe them out? And how would a drug that does wipe them out be used?

Researchers have been trying to answer these and other questions. Aguirre-Ghiso and others, for instance, have published papers identifying a protein that seems to be linked to DTCs. (An article published in Nature in June has more on this emerging field.) And some academic labs are pursuing drugs meant to muck with DTCs in one way or another.

HiberCell is trying to take the work a step further. It has rounded up leaders in the space like researchers from the Fraunhofer Institute for Toxicology and Experimental Medicine in Germany, who have been working to understand the genetics of DTCs by analyzing patient tissue samples. And the company has licensed two drugs from large pharmaceutical companies—Rigby wouldn’t say which ones—that may be able to keep DTCs asleep, or kill them while they’re sleeping. Those drugs could be ready for human testing by 2020 or early 2021.

The idea is for these “dormancy” drugs, as Rigby calls them, to be given very early on in a patient’s disease—either before or in conjunction with surgery to remove a tumor. Or, perhaps, the drugs could be added on top of existing treatments to extend the time that cancer is in remission, Rigby says.

Hillhouse Capital, 6 Dimensions Capital, Celgene, and other unnamed institutional investors, family offices and private backers contributed to the funding along with Arch and the NYCEDC.