Startup Ligon Discovery Lands Bayer Schering for First Deal with Major Pharma

9/29/10

Ligon Discovery has its first large pharmaceutical partner, a big deal for any biotech but especially for a company that spun out of an academic lab just 16 months ago. Cambridge, MA-based Ligon is announcing today it has inked a deal with Germany-based drugmaker Bayer Schering Pharma. The deal calls for Ligon to use drug-screening technology to discover potential treatments on behalf of Bayer Schering.

Both companies are keeping the exact terms of the deal under wraps, and no details about the types of diseases that Bayer Schering is targeting in this partnership were disclosed. Christian Bailey, who took over as Ligon’s CEO in June, said that his company is getting both upfront cash and additional payments based on Bayer Schering reaching certain drug-development goals. Bayer Schering is a pharmaceutical research unit of Bayer HealthCare.

The deal lends some credence to Ligon’s claims about the potential advantages of its drug-discovery system, which uses proprietary technology originally from Harvard University to conquer the problem of drugging tricky disease targets. The firm has one previous partnership with a fellow biotech startup, Plymouth, MI-based Lycera, to apply its screening technology to discover potential drugs for autoimmune diseases, which are the main focus at Lycera. But Bayer Schering is the first major drugmaker to form a collaboration with Ligon, meaning that the young firm’s technology passed muster with people who have extensive experience in drug research, Bailey says.

Ligon’s technology might enable its partners to succeed where previous drug-screening methods have fallen short. For example, advances in biological research such as high-speed gene sequencing have led to new discoveries into the inner workings of diseases such as cancer, particularly disease proteins and pathways of disease progression. To hear Ligon’s Bailey tell it, the lengthy and cumbersome process of developing tests to identify drugs against these new disease targets has held back the discovery of potential treatments.

“The challenge is that a lot of the new targets that have been discovered in disease pathways are much more complex than the ones we were finding 10 years ago,” Bailey said.

Here’s how the Ligon method is supposed to work: The firm’s technology involves a proprietary chemistry that quickly links libraries of drug compounds onto glass slides. Those slides are then used to screen the compounds against elusive disease targets to find potential hits. This differs substantially from previous discovery methods that worked the opposite way, building the assays around a thorough understanding of the biological disease targets’ functions, and then running tests to see which drug compounds could alter its function and qualify as a potential treatment lead. But the nuanced disease targets that many drug companies are now toiling with make building assays around them tricky.

“There are targets like chromatin regulators that, to design a target-based screen for them, you would need to understand the multifaceted functions of the target in order to be confident that the screen had any meaning,” Bailey said. “By turning the whole screening paradigm upside down, the Ligon technology allows you to do a target-based screen against that [disease target] without having a complete understanding of its function.”

While Ligon seeks collaborations with partners like Bayer as part of its commercial strategy, the company is primarily focused on applying its drug-screening technology to discover its own treatments for cancer, coagulation disorders, and bacterial infections. Yet its partnerships provide invaluable revenue to the startup as it travels down the long and expensive road to developing drugs. So far, the company has raised $1 million from Cambridge-based IncTank Ventures, where Bailey is a partner, and the CEO wants to land partnerships like the one with Bayer to limit the amount of venture capital the firm will need. (In fact, Bailey led IncTank’s initial investment in Ligon last year before he took the chief executive post in June from the founding CEO, Patrick Kleyn, who has stayed on as the firm’s president and chief scientist.)

In May, I interviewed Kleyn about the some of Ligon’s positive reviews from pharma executives and how it spun out of standout chemist Stuart Schreiber’s lab at Harvard. With this new Bayer Schering deal, the startup has justified some of that attention it got in its early days.

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