ARQULE: A KINDER KINASE INHIBITOR
Many self-respecting biotechs complain of not having the cash to unlock the awesome potential of their amazing platforms.
ArQule may be able to back up its claim. This combinatorial chemistry shop is developing small-molecule drugs for oncology
via its so-called Activated Checkpoint Therapy technology. After inking a deal with Daiichi-Sankyo to take its lead product,
a highly specific kinase inhibitor against non-small cell lung cancer and related tumors, through late-stage trials, the Boston-based
biotech got $75 million in up-front payments (and up to $560 million in potential milestones) to boost the rest of its pipeline.
The new management of CEO Paolo Pucci and Chief Medical Officer Brian Schwartz, who helped shepherd Bayer's kinase inhibitor
Nexavar to market in liver and kidney cancers, may be able to shake its second kinase inhibitor from the preclinical tree.
PACIFIC BIOSCIENCES: AT-HOME GENOME
A top competitor in the race for "the $1,000 genome," this San Francisco biotech was started in 2004 with venture capital
from Silicon Valley firm Kleiner Perkins, among other investors. PacBio is developing technology that does third generation,
"Single Molecule Real Time" sequencing of DNA—the goal being creation of an affordable, half-hour diagnostic tool in the personalized-medicine
bag. After raising $120 million last year, the biotech hired new chief scientific officer Eric Schadt, the big-deal biomathematician
who cofounded Rosetta InPharmatics in 1999 (and sold it to Merck, in 2001, for $600 million). Schadt will presumably help
define and refine the PacBio platform's commercial applicability with his experience as a leading innovator in data integration
and model building.
DRUG DELIVERY GAME CHANGER
The political and ethical thicket ensnaring embryonic stem cell research has led some enterprising scientists to focus on
an alternative: the body's own largely dormant adult stem cells. However controversial the original spur to this action, the
result has been a cascade of electrifying scientific breakthroughs from which not only new drugs but a whole new way of studying
disease and developing drugs might proceed.
Scientific and Executive Team Founders, Fate Therapeutics (GEOFF SCOTT)
Six pioneers in the field from Harvard, Stanford, MIT, the University of Washington, and Scripps Research Institute gathered
their brain power, intellectual property, and other synergies to form Fate Therapeutics in 2007. Based in La Jolla, CA, and
backed with $25 million in top-tier VC funds, Fate made news in May when it announced that its lead product was entering human
trials, edging out Novartis with the first ever adult stem cell therapy for blood and marrow transplants. Fate calls this
platform stem-cell modulation; a second drug candidate, for bone regeneration, is already in the works. The most interesting
aspect of all this may be that Fate is using not only conventional pharmaceuticals, but failed or otherwise abandoned ones
to try to spark such remarkable results.
Says CFO Scott Wolchko: "The business model around stem cell therapy as a delivery has been very difficult, so our approach
is appealing to investors. After all, we're talking about discovering and developing pills."
Fate's lead product is a fatty-acid derivative that was shelved as a treatment for peptic ulcers in the 1990s. The dud gained
immortality last year as "the first small molecule ever shown to activate stem cells to transplant better," according to Harvard's
Leonard Zon, director of the Stem Cell Program at Children's Hospital Boston and a Fate confounder. While screening some 2,500
chemicals in zebrafish embryos, Zon discovered that it had a knack for making stem cells multiply and move toward bone marrow.
The hope is that when added to human umbilical blood, the chemical will boost the quantity and quality of stem cells, and
improve the odds for post-chemo blood cancer patients who are without of a marrow donor. As many as 6,000 such patients die
each year because of the cost and risk of the procedure.
Embryonic stem cells have one huge advantage over the adult version: Their so-called pluripotency. That means they have the
potential to develop into any one of the body's 200 different kinds of cells; a mature stem cell can grow into only a cell
of its resident tissue. Yet scientists have succeeded in overcoming this limitation by reprogramming adult stems through the
use of genetic manipulation—essentially turning back the developmental clock and restoring the adult cell to its embryonic
state. In 2007, the Scripps Research Institute's Sheng Ding (a Fate co-founder) improved upon this remarkable feat of induced
pluripotent stem cell (iPSC) by returning a mature skin cell into its original, pre-skin state without touching its genetic
In April, Fate teamed up with Stemgent (which makes reagents for stem cell therapeutics), to launch Catalyst, an open-source
group of biotechs and pharmas to industrialize iPSC technologies. Based on a pre-competitive IP-sharing model, Catalyst aims
to develop and test the concept of induced pluripotent stem cells as an alternative method of drug discovery.
"We have talked to most of the Big Pharmas, and they are very positive," says Wolchko. "The novel business structure is attractive
from an ROI standpoint because all funds are pooled."
Not surprisingly, this hyper-dynamic field has already yielded a crop of first generation startups in addition to Fate. In
July, at the annual confab of the International Society for Stem Cell Research, iZumi Bio and a faction of leading Harvard
stem-cell scientists announced the formation of iPierian, with a VC bankroll of $11.5 million. Corey Goodman, the neurobiologist
who recently resigned after less than two years as the head of Pfizer's Biotherapeutics and Bioinnovation Center, was tapped
to chair the board of the new discovery shop, which will focus on finding small molecule treatments for neurodegenerative
In Vivo blogger Chris Morrison noted that "between these guys and Fate Therapeutics, we might have a new Alnylam/Sirna thing
going on in the iPSC space." The comparison to RNA interruption is noteworthy both in terms of the field's potential for therapeutic
advances—and IP litigation.
REBOOTING THE IMMUNE SYSTEM
The road to immune-based drugs is littered with failures, as the history of the "miracle drug" interferon illustrates. In
the making of immune-based drugs, selectivity and specificity are key. Because the human immune system is (obviously) such
a web of interactions, waves of unintended consequences can arise from a single intervention. Only the foolhardy enter without
first removing their shoes.
Shawn Iadonato, chief scientific officer, and Charles Magness, president and CEO, Kineta (MIKE NAKAMURA)
Charles Magness and Shawn Iadonato, cofounders of Seattle-based Kineta Pharmaceuticals, are far from being fools.The team
of CEO Magness and CSO Iadonato scored a win with their first biotech outing, Illumigen Biosciences, which they founded in
2000 to explore the therapeutic potential of genetic mutations that trigger immune protection against disease. One of the
many projects to attract VC funds in the bubble released by the Human Genome Project (HGP), on which both men worked. Using
a targeted sequencing approach that Magness helped invent for HGP, Illumigen identified a variation in a specific gene in
people whose immune systems mounted a powerful response to the hepatitis C virus. The protein developed around that discovery
showed a similar anti-HCV test-tube potency, at which point Cubist Pharmaceuticals swooped in for the acquisition. Magness
and Iadonato inked a deal worth up to $150 million in potential milestone payments, although 18 months later Cubist has yet
to file an IND for the compound.
With Kineta, the team hopes to duplicate that success by targeting a protein called RIG-1, or retinoic acid inducible gene
I, which serves as a kind of master switch to an important part of the body's cell-mediated immunity. A successful drug would
turn on RIG-1 even after a virus had invaded the system, and restore the innate immune function. The RIG-1 pathway is active
against a broad range of RNA viruses such as HCV, flu, and RSV, but so far it remains a target in search of a compound. Using
NIH backing, Kineta has developed a screening platform and is busy aiming for its target protein.
In July, the biotech did some acquiring of its own: a portfolio of ShK analogs from Airmid, a Redwood City, CA-based biotech.
Originally derived from the toxin of the Caribbean sea anemone, this class of compounds is being developed to treat autoimmune
disorders. Kineta has designated one such chemical that produces remission of Multiple Sclerosis in animal models as its lead
product; plans are for Phase I trials to begin by the middle of next year.
But Kineta has other ambitions as well. The biotech is selling itself as a retail R&D shop with a specialty in bringing preclinical
immune-based compounds to proof-of-concept.
"There's a glut of these potential drugs hung up at the bigger companies," Magness says. "And they don't know which will
be winners, and they're bad at determining that."
"Why can we do it better?" asks William Cadwallader, head of corporate development. "Because we have a world-class antiviral
"Look at it in terms of supply and demand," says Ken North, head of finance. "There's an oversupply of pre-POC drugs, which
are available at a comparatively low cost, and an undersupply of POC drugs, which are being sold or licensed at a big premium.
We turn the low-cost, pre-POC compounds into high-cost POC potential drugs."
The pitch is interesting. You can argue that Kineta has put its finger on one of the industry's most significant (if all-too-familiar)
problems. And a problem for Big Pharma is an opportunity for a little biotech. Kineta estimates that it can cut the cost to
the industry of getting to proof-of-concept from $50 million to $10 million.
But isn't it essentially what every hungry young biotech is saying? "Invest in us: we're cheap, fast, and smart. And if we're
not as cheap and fast as all that, we're certainly cheaper and faster than Big Pharma."
Absent a specific lead product or platform—an impressive-sounding retinoic acid inducible gene I or a cool sea anemone agent—doesn't
it have a bit of a hollow ring to it? After all, "supply and demand," doesn't have the same mystery and majesty as "meeting
serious unmet medical needs."
Still, as a business model—and a way to meet its goal of becoming profitable within three years—the pitch shows ingenuity.
Plus, if you were going to pass on investing in the RIG-1 platform or the ShK analogs, it offers an option an MBA could surely
wrap his or her mind around.
But that's biotech in the dog days of the Great Recession. And these magicians have already pulled one rabbit out of a hat.