From One Japanese Backer to Another: Galenea Advances Brain Drugs
When Cambridge, MA-based Galenea wrapped up a five-year, $90 million partnership with Japanese pharma company Otsuka in 2011, CEO Mark Benjamin feared the biotech’s days might be numbered. “We thought if we didn’t get a VC in the door within a few months, we’d be done,” Benjamin says.
Much to Benjamin’s surprise, Galenea not only survived, but it just secured another Big Pharma partnership—with another Japanese company, no less. On July 10, Galenea announced it had entered into a research collaboration with Eisai to develop new therapies for neurodegenerative diseases. Although the financial parameters of the relationship were not disclosed, Benjamin says the deal is a valuable piece of Galenea’s overall funding strategy, which essentially shields the nine-year-old company from having to rely on venture capital. “There are actually a number of different ways of sustaining the organization,” he says.
Galenea, which was co-founded in 2003 by MIT professor and Nobel laureate Susumu Tonegawa, has developed a technology platform for rapidly identifying molecules that may impact the communication between neurons, which is known in scientific parlance as “synaptic transmission.” The system, which Galenea calls MANTRA, takes normal or diseased neurons and measures the effects of compounds on multiple aspects of synaptic transmission.
The Otsuka partnership imbued Galenea with the cash and time it needed to develop its technology and use it to discover potential new therapies for brain diseases ranging from Alzheimer’s to schizophrenia. But after Otsuka’s $2.4 billion IPO in December 2010, Benjamin detected a shift in the pharma giant’s focus. “They weren’t going to do external R&D the way they had been doing it,” he says. “They weren’t going to focus as much in central nervous system research.”
Galenea’s executives spent much of last year unwinding the partnership, Benjamin says, which led to an amicable ending: Otsuka licensed two schizophrenia drug candidates that emerged from the MANTRA platform. Galenea will receive milestone payments and royalties associated with their development and marketing, Benjamin says.
Galenea was on a hunt for new partners and was engaged in several discussions when it came across Eisai, Benjamin says. Eisai’s scientists are researching a protein that affects synaptic transmission and is thought to cause the degeneration of neurons, Benjamin says. Eisai’s idea is not to block the protein—the approach taken by many drug developers—but rather to look for compounds that may restore the synapse to its normal functioning level, even in the presence of the toxic protein, Benjamin says. “It’s really what our technology lends itself to,” Benjamin says. “Instead of trying to remove the protein, we look for a small molecule we can add to the situation to make the synapse behave normally.”
In addition to working with Eisai, Galenea is developing its own compounds for neurodegenerative diseases. It has a schizophrenia program that’s partly supported by the Stanley Medical Research Institute, a Chevy Chase, MD-based organization that provides funding for research into that disease, as well as bipolar disorder. In April, the institute made a $6 million equity investment in Galenea’s schizophrenia research. The money will also fund a research collaboration between Galenea and the Broad Institute of Harvard and MIT. That collaboration, plus a $4.5 million NIH grant Galenea received in 2010, will fund the identification and animal testing of a lead molecule, Benjamin says.
Galenea is also using its technology platform to identify possible treatments for Huntington’s disease. In September it formed a research pact with CHDI Foundation, a Huntington’s-focused organization with offices in Los Angeles, New York, and Princeton, NJ. The financial details of the arrangement were not disclosed.
Benjamin says the support from disease foundations and government grants has been vital. Galenea has won more than $9 million in grants so far, he says.
As for funding the company going forward, Benjamin says Galenea will continue to look for Big Pharma partnerships—a process that he hopes will get easier as the dust continues to settle in the industry. “Most of the major pharma companies that had pre-clinical neuroscience research programs have gone through dramatic changes,” he says. “They’ve either completely shut down their programs or cut their budgets in half.”
But the interest in finding new remedies for brain diseases remains high, he says, and as those companies refine their strategies, he predicts they’ll be looking for new technologies like Galenea’s to help identify the most promising molecules to pursue. The company has already detected interest from in-house venture capital arms of some major pharma companies, he says. In the meantime, Galenea will continue to lean on foundations that support research into brain diseases. “The foundations have stepped into the venture capital breach,” he says. “They don’t want to see innovation grind to a halt.”