Testing New Business Model, Araxes Pharma Signs Deal with Janssen

Xconomy San Diego — 

In a short announcement yesterday, a previously unknown San Diego startup called Araxes Pharma said it entered into an exclusive partnership with Janssen Biotech of Horsham, PA, to develop a new group of cancer drugs that target an undisclosed signal pathway.

Terms of the deal were not disclosed, and CEO Troy Wilson wrote in an e-mail, “We can’t say much beyond what’s in the release, but it’s a great deal for both parties.”

So much for that deal, right? But there is part of the Araxes story he’s willing to discuss—and it’s an example of an innovative business model for pharmaceutical startups that’s gaining a foothold in San Diego.

Wilson (who is a San Diego Xconomist) was previously a co-founder and CEO at San Diego-based Intellikine, which was acquired by Japan’s Takeda Pharmaceuticals just over a year ago in a deal that could eventually pay out $310 million. The sale culminated years of work, but to Wilson, the experience also underscored one of the frustrating aspects of today’s drug development business.

In creating a pharmaceutical startup, he explains, “You get a team together and start working on a problem, and they’re smart people, and they almost invariably come up with more than one answer to the problem. That’s what happened at Intellikine and that’s what happened at Ambrx,” a specialized developer of antibody-drug conjugates where Wilson worked a decade ago. Many early stage pharma startups end up with a group of promising compounds under development.

Troy Wilson

“The problem comes when you want to do a partnership or an acquisition with a big pharma,” Wilson says, “because they just want to buy from the a la carte menu.” In many transactions, the acquiring pharmaceutical company is only interested in the lead drug candidate, and the other compounds become castoffs.

This is the same issue that Amira co-founder (and San Diego Xconomist) Peppi Prasit sought to address when he founded Inception Sciences in late 2011. With help from Menlo Park, CA-based Versant Ventures, Prasit structured Inception Sciences to operate as … Next Page »

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