Why Deborah Dunsire’s Unusual Bet on Alzheimer’s Makes Sense

7/31/13

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off, EnVivo, is not, in fact, a traditional VC-backed biotech. The partners and staff at a single Boston-area venture firm, Fidelity Biosciences, have played a very active role in managing it. One staff member negotiated the license for EVP-6124 in 2004 and a different one, partner Robert Weisskoff, has been running the company as interim CEO since March. Still, the company is, “not market tested,” according to one Boston-area biotech CEO I spoke to recently. What he meant was that EnVivo never had to raise money from other (skeptical) venture capitalists. One could say that comments like this are motivated by jealousy: what CEO wouldn’t want a company to run for which he or she is unlikely to ever have to raise outside capital? There is also some substance to this critique, since it points to a higher than usual level of uncertainty about the company’s products and its value proposition.

But Dunsire clearly is the kind of person who would do her own homework before signing on with a startup. While EnVivo may not have a large syndicate of experienced VCs to vouch for its promise, it has stirred up interest among pharmaceutical companies that I’ve spoken to who have expressed interest in partnering with EnVivo on favorable terms. I suspect Dunsire heard much of the same feedback from those independent sources when evaluating this opportunity.

Second, EnVivo does not work on cancer therapeutics. The highlight of Dunsire’s 17-year career at Novartis was when she led the market introduction of imatinib (Gleevec). When it was approved by the FDA in 2001, it was the most exciting (if narrowly applied) cancer drug to come along in years.

When Dunsire appeared at the Convergence Forum life sciences conference in Chatham, MA, in mid-May—just days after her departure from Millennium was announced— it felt like everyone in the room wanted to know what she planned to do next. There, Dunsire spoke in tones both humble and proud of the impact Gleevec has had on patients. Gleevec, she said, “has turned CML [chronic myeloid leukemia] into a chronic disease.” One patient Dunsire knows personally was “told that she would die before being treated with Gleevec in 1998.” That patient, Dunsire said, “is still running marathons. People who lived three to five years are now living fifteen years and showing no evidence of disease.”

So, like an Olympic champion returning to competition after some time off, it would make sense that Dunsire would try to get “runner’s high” again from launching a meaningful drug. How many more Gleevecs will there be in cancer, drugs with potential to take a death sentence and turn it into a chronic condition? At Convergence, Dunsire said that there are “vanishingly few cancers in which we might get there.”

Perhaps more to the point: how many of those rare drugs are wholly owned by small biotech companies that are not financially compelled to partner them with the pharmaceutical industry? Sticking with cancer might well have pushed Dunsire over to the pharma side of the industry, away from entrepreneurial biotech startups. Dunsire probably could have instead chosen to join an oncology-focused pharmaceutical company as CEO. She certainly has the street cred. But by getting out of cancer, she has given herself a chance for a second compelling success which is rarely seen in the pharmaceutical industry, and, more importantly, would help patients. Dunsire even gave a clue of her intentions to the audience at Convergence when she said, “I want to focus on the areas where we don’t have good therapies. Cancer. Neurosciences.”

Finally, what about the risk? Isn’t EVP-6124 a risky bet? The answer to that has to be an unequivocal “yes.” No drug in this class (the alpha-7 agonists) has worked. Targacept, the publicly traded CNS company in North Carolina, in 2012 was the latest to fail with an alpha-7 agonist, albeit for use in treating attention deficit hyperactivity disorder (ADHD). The Targacept drug, TC-5619, is still being tested in clinical trials for schizophrenia and Alzheimer’s. Like EVP-6124, that drug has produced positive data from an earlier Phase 2 study.

But in biotech, it is always important to look not just at the risk but also at the upside. Imagine what will happen if EVP-6124 works. It will not only become a multibillion dollar blockbuster, the likes of which have not been seen in the pharmaceutical industry for some time. Acetylcholinesterase inhibitors that are currently on the market act against the symptoms of Alzheimer’s, but don’t have an effect on the underlying biological problem driving the disease. Those drugs also cause unpleasant and debilitating side effects, while only briefly delaying the inevitable cognitive decline of Alzheimer’s patients. Even so, that class of drugs currently earns north of $2 billion in revenue.

There is another factor to consider in contemplating the potential for EVP-6124 and for EnVivo. Any analysis of Dunsire’s motivation to join EnVivo cannot ignore the man behind its sole VC investor. That is Edward “Ned” Johnson III, 83, whose family owns Fidelity Investments. At a $6.5 billion net worth, Johnson is the 52nd-wealthiest person in the country according to Forbes. Among his many contributions to Alzheimer’s research, he founded and funded the important research portal Alzforum.org. As if to underscore his commitment to the company and the field, Johnson supported Fidelity Biosciences when it bought out all the other EnVivo investors in 2008, becoming the sole shareholder in one of the few biotech companies developing a novel therapy for this disease. This is an unusual model but also one that might help explain how Dunsire could be convinced of the investors’ support for the company no matter what. The investor (singular, not plural) has a burning desire to leave a legacy.

The fact is that EnVivo is the rare biotech that can commercialize its own product. Johnson’s wealth makes that possible – even if, as some have speculated, the eventual cost to his firm’s fund for product development of this one product tops $600 million.

After so many failures of bold and not-so-bold products, Alzheimer’s drug development lately has contracted a bad case of incrementalism. The cost of Phase 3 trials is so prohibitive at $100 million per trial and up – and some products may require more than one Phase 3 trial before receiving regulatory approval – that until now only the biggest, most profitable pharmaceutical companies have been able to afford these trials.Even those companies are becoming skittish about anything but those approaches that, judged by today’s science, seem most likely to succeed. A successful EnVivo could change that paradigm and tackle the development of truly innovative drugs, including those based on drugs that seek to attack the disease in creative new ways, based on deeper understanding of the molecular biology. Now that’s what I call upside. And it explains Dunsire’s choice better than any other explanation I can imagine. Now, EVP-6124 just has to work. As Ned Johnson himself told me in a chance encounter on an airplane last year, it is way too early to credit him with improving the odds for Alzheimer’s drug development. Wait until we see if EnVivo’s alpha-7 works, he said. “The proof of the pudding,” he went on, “is in the eating.”

Steve Dickman is a former venture capitalist and the CEO of boutique consulting firm CBT Advisors as well as the author of the blog Boston Biotech Watch. Follow @

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