Agios, Nourished with $130M Celgene Deal, Expanding Staff and Labs to Starve Cancer

8/19/10

[Editor's note, Aug. 23, 2010: Updated and corrected, see below.] David Schenkein, the CEO of the biotech startup Agios Pharmaceuticals, walked into the firm’s Cambridge, MA, headquarters last week with building plans rolled up in his hand. It was evident that his three-year-old company is growing quickly to pursue new drugs to starve cancer cells, and that it has the funds to do it because of the $130 million the firm received this spring through a deal with the cancer drugmaker Celgene (NASDAQ:CELG).

Summit, NJ-based Celgene’s large payment to Agios is uncommon. Not only is it a huge sum for a young biotech to grab, the deal gives Celgene the exclusive option to license any of the potentially cancer-starving drugs that Agios discovers for a certain period of time (neither company will say how long). The unique quality of this deal prompted me to head down to Agios’s labs and also talk to Celgene last week to learn why exactly this deal came together.

For starters, Schenkein has always been clear about his desire to keep Agios on the cutting edge of the emerging cancer metabolism field. The firm wants to develop drugs that target mutated enzymes that are believed to be culprits in feeding certain cancer cells’ addiction to specific nutrients that enable them to grow out of control. The idea sounds simple: wipe out the mutated enzymes, starve the cancer cells to death. But key discoveries that have exposed these cancer-enabling enzymes have only just surfaced in academic journals over the past several years, Schenkein says, even though it’s been known since the 1920s that cancer cells metabolize nutrients differently than healthy cells do.

This emerging field is drawing interest from drugmakers around the world. To find its own drugs to target cancer metabolism, British drugmaker AstraZeneca says it formed a three-year research deal with Cancer Research UK in February. London-based drug giant GlaxoSmithKline has been assembling its own internal drug discovery group to find molecules to home in on cancer metabolism targets. Those are just two of several groups in the hunt. And all alone, it’d be impossible for Agios to match the level of resources that larger outfits like AstraZeneca and Glaxo can deploy.

“We view this space as really beginning to explode,” Schenkein said. “Over the next three to five years, as more players move into this space, it’s going to be a bit of a land grab to see who can dominate the biology and understand the targets. And I don’t think you can do that by dabbling, and that requires a lot of resources and dedication and speed.”

The company weighed several options to gain the resources it needed: to raise money through the capital markets, seek funding through multiple corporate partnerships, or find one large partnership. In the end, Schenkein says, the best way to bring in the capital his company needed to stay ahead in this field was through a large corporate partnership. After considering a number of companies with which to form a partnership, Agios chose Celgene, which had been doing research that complemented Agios’s work in the cancer metabolism field.

“Frankly, the level of the investment was intended to give [Celgene] a competitive advantage in the emerging landscape of metabolic targets,” Thomas Daniel, Celgene’s president of research, said in a telephone interview. “We were impressed with the technology platform that [Agios] assembled to do that.”

“Secondly, they’ve done a great job of recruiting talent in a geographic area where we don’t have operations,” Daniel added. With the firm’s deal with Agios, Celgene now has footholds in most of the major biotech markets in the country. The firm gained a presence in San Diego through its acquisition of Signal Pharmaceuticals in 2000, and later in the Bay Area in its buyout of Boulder, CO-based Pharmion, which brought the buyer its lab operation in San Francisco’s Mission Bay neighborhood.

Agios’s scientific founders—including Lewis Cantley of Harvard Medical School, Tak Mak of the University of Toronto, and Craig Thompson of the University of Pennsylvania—have made some of the important recent discoveries in the field of cancer metabolism. Which gives the firm some valuable technology and capabilities that are not easily duplicated. Its unique position in this emerging area helped the firm raise $33 million in a Series A funding round from Third Rock Ventures, Flagship Ventures, and Arch Venture Partners in 2008. Third Rock partner and co-founder Kevin Starr then ran the company until the firm hired Schenkein to take over as chief executive last summer.

[Editor's note, Aug. 23, 2010: This article originally stated that Third Rock Ventures partner Mark Levin initially ran Agios. This was incorrect. We amended the text to indicate it was actually Third Rock partner Kevin Starr who served as the first CEO.]

Schenkein, an oncologist by training, is an example of the crack team that Agios has assembled. Before he joined Agios, he was head of the large cancer drug business at South San Francisco-based biotech giant Genentech (now part of Roche). Prior to Genentech, he was a senior research executive at Millennium in Cambridge. Even while he’s piloting a fast-growing startup, Schenkein says he spends a day every other week seeing patients in the hematological cancer unit at Tufts Medical Center in Boston.

Last month, Agios co-founder Cantley began working at the company one day per week to consult with the growing firm’s research staff and serve as a mentor to its scientists. Schenkein said that Cantley is helping to shape the growing team of researchers, which make up the majority of the firm’s 50-person staff. When I checked last week, there were about 15 job openings posted on the firm’s website. And the company expects to expand its staff to 60 people by the end of this year, the CEO said. To house its growing operation, the firm is taking over an additional floor in the mid-rise building near Central Square where it now occupies one floor (hence the building plans Schenkein was carrying).

The funding from Celgene should also be enough to enable Agios to complete the research that is necessary to begin human testing, Schenkein says. The firm’s most advanced research efforts are focused on mutated enzymes that are believed to play roles in certain brain tumors known as gliomas, leukemia, and other forms of cancer. The company also plans to develop each of its drugs with a companion diagnostic test to show whether the mutated enzymes its drugs will target are present in patients.

While the Celgene deal has given Agios a big boost in its research efforts, the startup’s chief executive hasn’t lost sight of the firm’s mission to save the lives of cancer patients like the ones he cares for at Tufts. “Is there pressure? Absolutely.” Schenkein said. “I think we have a commitment here and a responsibility to really understand how important this field and space can be. And we’re not taking that responsibility lightly.”


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