Riding the Diabetes Wave, Novo Nordisk Sees Chance to Scoop Up Biotech Talent in Seattle

Xconomy Seattle — 

Diabetics can’t just quit taking insulin when the economy takes a nosedive. So if you’re the world’s largest producer of insulin for a chronic, and growing, medical condition, your outlook on life isn’t that bad right now. That’s the enviable position of Novo Nordisk, the Danish drugmaker, and part of the reason why it feels the time is right to place big bets for the future with a research center in Seattle.

Novo Nordisk first let it be known it was coming to Seattle in August, when the company confirmed it was looking to hire about 80 people for a new immunology research center by 2010. They didn’t elaborate much then, so I stopped by to visit site head Don Foster at his new digs at Mercer Street and Fairview Avenue North in Seattle.

Novo gets most of its most of its $7.5 billion in annual revenue from diabetes treatments, plus a blockbuster hemophilia drug called Factor VII. For more than two decades, it has looked to Seattle for research that could help it diversify. The company harvested a few ideas when it owned ZymoGenetics from 1988 to 2000 (including Factor VII), until Zymo spun off to go its own way as an independent company. Now Novo has decided to fill that void with its own basic research center in town, which will focus on identifying new targets on cells for drugs, along with candidate molecules to hit them. The pharmaceutical industry has an abysmal record at this kind of research work, but Novo sounds undaunted.

“We have an opportunity to capture some of the best scientific talent in the U.S. here,” says Foster, a biochemist by training, and former vice president of research for ZymoGenetics. “It’s a good time to be recruiting people in Seattle and across the U.S. A lot of the biotech and the pharmaceutical industry is struggling, and it’s hard to watch.”

This isn’t a random bet out of left field—Seattle has historic strength in immunology, dating back to the early days of the Fred Hutchinson Cancer Research Center in the 1970s, and at Immunex in the 1980s and 1990s. It’s still home to some of the talented people that created the world’s best-selling biotech drug, etanercept (Enbrel) for rheumatoid arthritis and other autoimmune conditions. Novo sees an opportunity here to tap the scientific talent pool, in hopes of coming up with another Enbrel-caliber breakthrough for autoimmune diseases, in which the immune system goes haywire and starts attacking healthy tissue like an invading virus.

Autoimmune problems also happen to be one of the biggest business opportunities in the pharmaceutical business. Rheumatoid arthritis alone is now a $10 billion a year market, and that’s just the beginning. Something like 80 different autoimmune diseases are estimated to affect as many as one in 12 Americans, according to the National Institutes of Health.

Novo is in this market for long haul, working on a 10-year strategic plan in Seattle, Foster says. The company signaled how serious it is about pursuing the science of autoimmune diseases last month by signing a partnership with VLST, an Accelerator-backed startup just a few blocks away in South Lake Union. That deal provided $12 million upfront to the smaller company, in exchange for giving Novo the rights to cherry-pick certain autoimmune disease drug candidates from VLST. The company, co-founded by Craig Smith, a co-discoverer of Enbrel, is doing exploratory science that it says could lead to major new insights into autoimmunity. The company is looking at the proteins that viruses secrete to help fend off an immune system reaction that might kill them as foreign invaders. The concept is to study these proteins, and the targets they hit on cells, to develop new drugs that mimic that same viral effect created by Mother Nature.

It could be worth a lot more to the smaller company if those drug candidates reach certain milestones in development, the companies said.

So far, Novo has hired a team of about 18 people, plans to hire another dozen in the next couple months, and will fit them in temporary lab space on the first floor of its building. The longer-term vision is to set up on the fourth and fifth floors of its building, owned by BioMed Realty Trust, which are currently under construction. Foster took me up there to show me the view, which offers a sweeping lookout over Lake Union, the Space Needle, and downtown.

Financial stability—and the job security and generous benefits that come with it—is one of the key selling points Foster underscores about his new employer. The company has already spent $2.5 million to set up the labs, and has shown its willingness to support basic science through the deal with VLST, he says. He personally worked with the Danish counterparts for 15 years while he was at ZymoGenetics, and says he has a pretty good idea what to expect from how they work. He wouldn’t be specific about the center’s goals, in terms of how many drug candidates it is supposed to produce for Novo’s clinical development teams in Denmark, but he insists he has solid backing from across the Atlantic to get this work moving.

“They are making a long-term commitment to Seattle’s that fairly massive,” Foster says of the bosses. “I love the science that’s going on at VLST. We’re committing a huge fraction of resources to the early stage research there, as well as our own internal programs.”

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