Anchor Therapeutics Hooks Deal Worth Up to $480M with J&J

9/9/10

Anchor Therapeutics has landed its largest corporate partnership yet. The Cambridge, MA-based biotech startup has secured a partnership that could be worth up to $480 million with Ortho-McNeil-Janssen Pharmaceuticals, part of the healthcare products giant Johnson & Johnson (NYSE: JNJ).

Ortho-McNeil-Janssen, based in Titusville, NJ, has agreed to pay Anchor an undisclosed upfront fee, provide research funding to the startup, and deliver potential milestone payments in the deal to license several drug targets in the fields of cancer and metabolic disease treatment. The deal provides further proof that big drug companies are interested in Anchor’s novel pepducin drugs, which hold the promise to hit cell-signaling targets for treating many types of diseases.

“[Ortho-McNeil-Janssen] has taken our value proposition to heart, and that is the proposition that we can go after targets that other people can’t,” says Anchor CEO Rick Jones.

Anchor’s biological drugs home in on cell-signaling proteins, which reside in the cell membrane, called G protein coupled receptors, or GPCRs. Its drugs are designed to anchor into the cell membrane, where they can manipulate specific GPCRs in order to treat certain diseases. (There’s a tidy animation of how this works on the homepage of Anchor’s website.) These are well-known receptors, and drugs that target them already account for some $40 billion in annual sales, but Anchor offers methods to hit certain members of this family of receptors in ways that standard small molecule drugs haven’t.

To hear Jones tell it, the catalyst for closing the deal with Ortho-McNeil-Janssen was the biotech’s lab experiments involving a signaling protein called gpr39. The receptor is believed to play a role in metabolic diseases such as Type 2 diabetes, but there are no compounds that have been able to modulate its activity, and it’s unknown how it is naturally activated. Yet Anchor’s early success in demonstrating the effects of its pepducin drugs on this receptor prompted Ortho-McNeil-Janssen’s scientists to champion the deal and helped get it done, he said.

Ortho-McNeil-Janssen is providing enough funding in its upfront fee and research support to cover all of Anchor’s expenses for its part in the collaboration, Jones says, without providing specific financial numbers. The big drugmaker will also decide which compounds discovered and developed in the deal will be advanced into human clinical trials, for which it would be responsible for management and all expenses. If any of the drugs involved in the deal are approved, the Johnson & Johnson drug unit would be in charge of commercialization activities.

This partnership deal also has implications for Anchor’s efforts to raise additional venture capital, according to Jones. Last month, the firm completed a $10 million closing of its Series B funding round from its previous investors HealthCare Ventures, Novartis Option Fund, and TVM Capital. With this Big Pharma deal secured, the Anchor CEO said, he hopes he can get one or two new venture investors to provide more funding in the Series B round. The company has now raised $29 million in venture financing.

This latest licensing deal is larger than Anchor’s deal revealed in 2008 with the Swiss drug giant Novartis. In that transaction, Novartis bought the option to license one of Anchor’s experimental drugs for cardiovascular or gastrointestinal inflammation. Jones said that the Novartis option deal, which was handled by the Novartis Option Fund, remains important to his company. If Novartis exercises its option to license a drug from Anchor, the biotech startup is eligible for as much as $200 million in development and regulatory milestone payments.

Even after striking a pair of Big Pharma partnerships, Anchor (previously known as Ascent Therapeutics) still has retained full ownership of its lead pepducin drug candidate that targets the CXCR4 receptor, Jones said. The firm, which hopes to get permission to begin initial human testing with the drug in the next 12 to 18 months, is pursing potential development of the compound to regenerate bone and cardiovascular tissues. The CEO explained that the CXCR4 receptor is present on stem cells, and the drug’s ability to target that protein in the membrane of cells might enable it to recruit stem cells to the site of injuries to re-grow damaged tissues. Last September, the firm discussed the use of the compound for treating patients with blood cancers who need to get blood-forming stem cell transplants.

Jones said he plans to provide further updates on Anchor’s pipeline during his presentation next week at the BioPharm America 2010 conference in Boston.

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