Tuesday, November 20, 2007

Who Needs VCs?

Apparently not Neurimmune Therapeutics, a University of Zurich spin out that began operations in April this year. This antibody-focused start up plans to go direct from seed- to deal-funding, according to CEO Ed Stuart, skipping the VCs entirely. “It’s a new business model,” says Stuart, former managing director and CBO at Munich biotech firm U3 Pharma.

So far, so good. The company started out with $5 million of seed money, most of which came from chairman and lead investor Karsten Henco, a former CEO of Evotec and founder of various other biotechs including Qiagen. Yesterday it upped the ante somewhat, and signed a deal with Biogen Idec that could be worth up to $390 million.

Ok, so we’re skeptical about biodollars. But Stuart assured the IN VIVO Blog that it “wasn’t all post-approval milestones,” and that there was a good chunk of up front money too. Those funds, along with the seed finance, “will fund the company for a number of years,” he said.

For now, Neurimmune’s only got about 10 employees, so it’s not a big burn. But this is nevertheless a rich and validating deal for the young firm that’s hardly out of the blocks. So what’s it doing? Something rather simple, actually. It seeks out antibodies among healthy individuals and uses a range of assays and other selection techniques to identify those that might be useful in fighting certain diseases—particularly CNS diseases.

So in the Biogen deal, Neurimmune will identify antibodies that bind to amyloid beta, thought to be the main culprit behind the neuro-degeneration and loss of cognitive function among Alzheimer’s patients. “We have already found a number of antibodies among healthy patients that recognize amyloid-beta,” explains Stuart. And since Biogen now has access to that entire program, it will receive several amyloid-beta-relevant antibodies over the next couple of years that it will go on to develop and commercialize.

Neurimmune calls its platform Reverse Translational Medicine, since “we’re starting not with disease, but with healthy people,” explains Stuart. It’s a logical approach—if someone at risk doesn’t have Alzheimer’s, what’s protecting them? Importantly, it also skirts the IP roadblocks that prevent many new antibody companies from using conventional techniques such as phage display or transgenic mice to create antibodies against certain well-validated targets. “We don’t face the normal IP issues,” notes Stuart, “since we’re not tampering with antibodies in any way at all. We’re getting out of people something that has already been optimized—by Nature.”

Mother Nature’s never that simple. It’s likely that several antibodies are required to protect people against certain diseases, and this range probably varies among different sets of individuals. As with many small molecule drugs, several moieties might be required to interact with several receptors. “It’s too early to tell,” says Stuart. And if Neurimmune's scientists aren't tampering with antibodies, just finding them, what’s to stop others doing the same? It’s all in the selection assays and the clinically-relevant questions asked of those individuals supplying the antibodies, says Stuart.

Anyway, Biogen Idec is apparently sufficiently convinced to have signed what is, in Henco’s words, “among the largest pre-clinical deals,”—and to have done so while much of its management’s attention is on selling the company. So does Neurimmune have a robust change-of-control clause in place? “We’re smart people,” said Stuart.

Maybe that’s why they’re avoiding VCs, too.

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