In Latest Local Venture Philanthropy Deal, Cystic Fibrosis Foundation Pledges up to $37.7 More to Epix

4/7/08

Just a few weeks after a similar arrangement with Cambridge, MA’s Vertex Pharmaceuticals (NASDAQ: VRTX) showed early signs of bearing fruit, the Cystic Fibrosis Foundation is expanding its collaboration with another local biotech, Lexington, MA’s Epix Pharmaceuticals (NASDAQ: EPIX). The nonprofit initially inked a research, development, and commercialization deal with Epix in 2005, aimed at developing drugs that target CFTR, the protein that malfunctions in cystic fibrosis patients. The expansion of the arrangement, announced today, puts additional payments to Epix of up to $37.7 million on the table, bringing the total potential value of the alliance to more than $50 million.

The Vertex and Epix deals are just the latest examples of what many believe is a growing trend of drug developers turning to disease foundations and other nonprofits as a way to fund research—particularly very early stage studies and work focused on rare diseases. An additional bonus of such “venture philanthropy” deals is that companies often wind up retaining equity, IP, and marketing rights that they would have had to give up in agreements with more traditional investors and partners. (For more on the latest Epix deal and local venture philanthropy deal-making in general, see this story from the Boston Globe.

Hard numbers on the growth of venture philanthropy are hard to find, but an oft-cited estimate from the research firm CenterWatch indicates that such deals totaled $75 million nationwide last year—a tenfold increase over 2000 levels. In addition to Epix and Vertex, local firms (all in Cambridge) cashing in on the trend include:

—Acceleron Pharma. The startup announced in January it had received a “biotech investment award” from the Multiple Myeloma Research Foundation; the Boston Globe today said the foundation has given the firm $1 million

—Alnylam (NASDAQ: ALNY), which has collaborations with and grants from the Cystic Fibrosis Foundation, the Michael J. Fox Foundation, and St. Jude Children’s Research Hospital

—Altus Pharmaceuticals (NASDAQ: ALTU), which has a strategic alliance with the Cystic Fibrosis Foundation dating back to 2001

—Biogen Idec (NASDAQ: BIIB), which was one of 22 companies to get a total of $25 million from the Juvenile Diabetes Research Foundation, according to the Globe

—CombinatoRx, (NASDAQ: CRXX) which has collaborations with the Cystic Fibrosis Foundation, CHDI, Accelerate Brain Cancer Cure, and the Spinal Muscular Atrophy Foundation

—FoldRx, which inked a $22 million agreement with the Cystic Fibrosis Foundation last summer.
(The Boston Globe had a nice write-up of the deal and venture philanthropy trends at the time.)

—Genzyme (NASDAQ: GENZ), which will share up to $1 million in milestone payments from the Juvenile Diabetes Research Foundation with Florida’s AGTC.

—Tolerx. The Juvenile Diabetes Research Foundation has been funding the development of Tolerx’s monoclonal antibody treatment for type 1 diabetes since 2006. (For more on that and other applications of the company’s technology, see David Stipp’s profile of Tolerx.)

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