Immune Design Snags $212M Deal With MedImmune To Provide Vaccine Booster

Xconomy Seattle — 

Immune Design has struck its first big deal with a Big Pharma company.

The Seattle-based vaccine developer has agreed to provide a license to an immune-boosting compound, called an adjuvant, to the MedImmune unit of London-based AstraZeneca. The pharma giant plans to use the compound as a key ingredient in potent new vaccines it has in the works. In return, Immune Design will get undisclosed upfront cash, future milestone payments worth up to $212 million based on development and sales goals, plus “mid-single digit” percentage royalties if the vaccines become marketed products, according to Bruce Carter, Immune Design’s executive chairman.

Today’s deal is the latest step forward for Immune Design, a company founded two years ago by a trio of scientific heavyweights—Nobel laureate David Baltimore of Caltech, Larry Corey of the Fred Hutchinson Cancer Research Center, and Steve Reed of the Infectious Disease Research Institute (IDRI) in Seattle. Immune Design raised $32 million its second round of venture capital in July, bringing its total fundraising haul to $50 million.

Back in July, Reed said in an Xconomy exclusive he was following the playbook of his old company, Corixa, which sought to build a foundation in the first couple years and start doing deals by year three. It’s an important point in the evolution for a biotech startup with a lot of proprietary technology that few people have really seen yet up close.

“The money is important, but what’s more important is that someone very interested in developing new vaccines recognizes the necessity of putting our adjuvant in their vaccine,” Carter says.

Bruce Carter

Bruce Carter

MedImmune is paying to get ahold of Immune Design’s synthetic chemical adjuvant, called glucopyranosyl lipid A (GLA). This compound is supposed to boost the effectiveness of vaccines in a cheaper, more reproducible, and more scalable fashion than previous generations of adjuvants that were derived from natural products. Reed and his teams at Corixa and IDRI did pioneering work on a natural product adjuvant, known as Monophosphoryl Lipid A (MPL), which is now a critical component of GlaxoSmithKline’s vaccine for cervical cancer, called Cervarix.

While this deal for Immune Design isn’t huge by biotech standards, it is intentionally limited in scope, Carter says. MedImmune has obtained the rights to use the GLA adjuvant to enhance experimental vaccines for respiratory syncytial virus (RSV), Epstein-Barr virus, and cytomegalovirus (CMV) infections.

MedImmune, of course, is well-known for its expertise in respiratory syncytial virus, since its fortune was built on the success of palivizumab (Synagis), which generated $1.23 billion in sales in 2009. Instead of just treating RSV, MedImmune now has its sights set on developing a potent new vaccine for the illness, Carter says.

Rather than just talk about the value of GLA to MedImmune’s vaccine program, Immune Design let the bigger company test drive the adjuvant to see what it could do in its own labs. The deal was done after MedImmune saw what the adjuvant was capable of, Carter says.

Immune Design may provide a license to one or two more companies for specific uses, but its strategy is primarily to keep the GLA technology to itself for its internal vaccine development programs, Carter says. “We’ll be sparing in our licensing efforts,” Carter says.

More of the focus at Immune Design is being directed to its own therapeutic vaccine candidate in preclinical development, for herpes simplex-2 infections, the cause of genital herpes. That program should be ready for clinical trials as early as the second half of 2011, Carter says. A program like that should be able to generate value quickly, because unlike treatments for cancer or autoimmune disease, anti-viral activity in a small number of patients can provide compelling predictive evidence for future clinical trials.

Carter is best known to the biotech world as the former chairman and CEO of Seattle-based ZymoGenetics. He couldn’t say much about what’s going to happen at his former company, which was recently acquired by Bristol-Myers Squibb for $885 million. Carter came out of semi-retirement in November 2009 to take on the executive chairmanship of Immune Design, purportedly on a three-day-a-week basis. I asked him how that arrangement is going, and noted that it’s not actually quite what he signed up for.

“I should have known, I’m old enough to know better, but when a VC tells you that they want you to come work part-time at a company, what they really mean is they want to pay you part-time,” Carter says.

He said this in his usual charming way, and sounded like he’s enjoying the ride at a small startup again. “Our basic strategy is to show Phase II data with [herpes simplex virus 2] that we can make a therapeutic vaccine with antiviral activity.”

He noted that Bristol-Myers Squibb paid $85 million upfront to ZymoGenetics to get development rights to its hepatitis C drug candidate after it showed promise in just 19 patients. That kind of clinical trial work is well within the scope of a startup like Immune Design, and the potential payoff is the kind of thing that can still make the financial math work for venture capitalists. “This is a blockbuster opportunity,” Carter says.