Google’s Calico Nabs First Partner, Cuts $1.5B R&D Deal With AbbVie

Xconomy San Francisco — 

[Updated, 9/4/14, 8:25 am ET] It’s still a public mystery what Google’s (NASDAQ: GOOG) high-profile anti-aging startup, Calico, is really up to. But the drug company AbbVie has had a peek behind the curtain and is ready to throw a whole lot of cash behind the company’s high-profile team in a deal to develop medicines together.

AbbVie (NYSE: ABBV) and Calico today announced a massive R&D collaboration to co-develop treatments for age-related diseases like neurodegeneration and cancer. The deal, which may ultimately include $1.5 billion in total cash coming from both parties, will enable Calico to create an R&D facility in the San Francisco Bay Area to discover and develop drugs. Calico will begin hiring people “immediately” in the hopes of putting together a “substantial team of scientists and research staff” to fill the facility, according to a press release.

Specifically, AbbVie and Calico will each pour $250 million into the collaboration. Another $500 million apiece could come later, athough they didn’t say Wednesday what would trigger the additional cash.

The deal is designed to be a long partnership, in which Calico will do the early research, discovery, and clinical work through Phase 2a before handing development duties off to AbbVie.

At that point, AbbVie will have the option to manage late-stage trials or commercial work that comes out of the partnership. The deal appears to envision at least a 10-year working relationship, and potentially more.

Both companies will split costs and profits of any drug that emerges from their combined efforts.

“This collaboration demonstrates our commitment to exploring new areas of medicine and innovative approaches to drug discovery and development that augments our already robust pipeline,” said AbbVie chairman and CEO Richard A. Gonzalez, in a statement.

The deal also marks the first big concrete partnership—and really, the first tangible move forward—for Calico since it splashed onto the scene, gracing the cover of Time Magazine last year.

Google’s backing and the gold-plated group of big-name scientists and ex-Genentech executives leading Calico have given it both instant buzz and, to some extent, credibility within the industry. Former Genentech chairman and CEO Art Levinson leads the effort, and is joined by the South San Francisco cancer drug giant’s former executive VP and chief medical officer Hal Barron; Princeton University geneticist David Botstein; UCSF scientist Cynthia Kenyon; and Robert Cohen, a senior oncology fellow at Genentech.

AbbVie’s presence now adds a layer of industry validation.

“Our relationship with AbbVie is a pivotal event for Calico, whose mission is to develop life-enhancing therapies for people with age-related diseases. It will greatly accelerate our efforts to understand the science of aging, advance our clinical work, and help bring important new therapies to patients everywhere,” Levinson said in a statement.

[Updated with board news] Levinson resigned from Roche’s board of directors less than 24 hours after the announcement.

That said, there’s little information on Calico’s website other than a short, vague paragraph about its plan to “harness advanced technologies” to understand the biology that controls lifespan, and using that knowledge to “devise interventions” that help people live longer. Skepticism abounds, from the science behind the company to the implications on society of helping an aging population with difficulty paying for healthcare live longer.

Calico is something of an organizational hybrid between an academic institute and a company. As Botstein previously told Xconomy, Calico’s operating model is undetermined, and could develop ideas in-house, or support outside partners.

It’s the second big deal in what’s been an active day, meanwhile, for AbbVie, the one-time pharmaceutical division of Abbott Laboratories best known for the arthritis drug adalimumab (Humira). Just this morning, AbbVie agreed to pay $275 million up front, and as much as $805 million in total, to gain rights to a blood cancer drug being developed by Cambridge, MA-based Infinity Pharmaceuticals (NASDAQ: INFI).