How maddening is drug development? Sometimes, all the scientific literature in the world leads you one way, and your own data take you another. That’s why even experienced drug hunters often need a little luck to succeed. Just ask longtime industry veteran John Knopf, who had no idea his Cambridge, MA-based Acceleron Pharma, would end up battling a gene therapy company to be first to market with an approved treatment for a devastating blood disorder called beta-thalassemia.
Indeed, Acceleron (NASDAQ: XLRN) started with a protein that theory suggested would be harmful to bone density. Surprisingly, the company found it did the opposite, and actually boosted blood levels to boot—so much so that it took awhile for Acceleron to figure out what disease to target with it. But the protein, called sotatercept, turned out to be just right for beta-thalassemia—a genetic disease that often leaves patients needing monthly transfusions and iron chelation therapy to survive the anemia they face. The drug is part of a big partnership with Summit, NJ-based Celgene (NASDAQ: CELG), was the centerpiece of a $96.7 million IPO Acceleron pulled off last year, and could head to the Phase 3 proving ground early next year with the chance to become the company’s first approved drug—if all goes well in clinical trials, of course.
“It’s just tremendous the way things have evolved, “ Knopf says. “We got lucky in a few spots.”
Significant hurdles are still on the horizon, among them a possible big commercial challenge from Cambridge-based Bluebird Bio (NASDAQ: BLUE)—which is developing a gene therapy for beta-thalassemia that produced some intriguing results in a very small study a month ago. But Acceleron will sign for that, given it wasn’t too long ago the company didn’t know what to do with sotatercept.
This tale of serendipity begins ten years ago, when Knopf was at the Genetics Institute—one of the early high-fliers in biotech. GI was bought out by American Home Products (later renamed Wyeth) for $1.25 billion in 1996, and Knopf, who started out there as a molecular biologist, left in 2003 when the two companies were later being merged together (“it really wasn’t something that I was cut out for,” he says).
Thinking of what to do next, Knopf brainstormed with GI founders Tom Maniatis and Mark Ptashne, and decided to form a company, Acceleron, around research into a group of proteins called the TGF-beta superfamily. These proteins help regulate the growth and differentiation of cells. Despite decades of research in the field, Knopf says there still were a lot of unknowns about the TGF-beta proteins. That meant there was plenty of room for Acceleron to snag some intellectual property and make something out of it.
The approach Knopf, one of many veterans of GI to lead new companies, took was broad. He brought in IP from a wide range of sources—from the Ludwig Institute for Cancer Research in New York, the Karolinska Institute in Sweden, and the University of South Florida, among other places—covering the receptors in this family of proteins and the antibodies directed at those receptors. Still, Knopf did so “without a clear idea precisely of what each of them would be used for,” he recalls.
“Our idea was this is a rich area with molecules that were known, at least from the developmental biology side, to have a dramatic effects on different tissues,” he says. “We felt that by gathering up all this IP and really understanding it better than anyone else, we’d be well positioned to capitalize on the low-hanging fruit.”
Investors agreed there was great potential. Acceleron became one of the more well-capitalized and larger privately-held biotechs in Boston over the past decade. It raised more than $140 million from industry partners and venture firms like Polaris Partners, OrbiMed Advisors, Flagship Ventures and others, and amassed a large, 150+ person workforce, bucking the trend towards virtual biotech companies.
Finding actual drugs in all that IP, however, proved to be a much tougher challenge. One of Acceleron’s earliest creations was a candidate now known as sotatercept. It’s is a genetically engineered protein that blocks a receptor on cells called activin receptor type IIa. The scientific literature, to that point, had indicated that in studies of isolated cells, activin appeared to help the body form bones, and had a role—albeit an unclear one—in red blood cell formation. So in theory, blocking it would make people more frail, and potentially even anemic.
Knopf says Acceleron believed that things could be different if an activin blocker were given to living being. And as it turned out, things were far different than even Acceleron expected. Acceleron tested the drug in animals, then plopped one of them on an X ray machine, and saw with the help of an assay a “massive” increase in bone density. Executives were stunned.
“That led us to suspect someone had mixed up the animals,” Knopf says, looking back.
That wasn’t the only surprise. The animals given sotatercept also showed an increase in red blood cells, which also ran contrary to all the scientific literature Knopf and his team had read.
“What we learned from this is, a lot of the literature in this area was done with isolated cells in isolated settings, and often times it could lead you down the wrong path,” Knopf says. “So we could not rely on any of the literature. We really had to do a lot of the experiments ourselves.”
Acceleron suddenly found itself with a drug that appeared to be very potent. The question was what to do with it. Could it work as a drug for the anemias attributed to either failing kidneys or chemotherapy? Those are big markets, to be sure, and Acceleron made some noise a few years back about diving in. Meanwhile, significant safety concerns have arisen about the once-blockbuster drugs for those conditions, the recombinant variants of erythropoietin—like Amgen’s epoetin alfa (Epogen).
But while those safety concerns have created opportunities for new treatments, replacing the existing drugs is no easy task, and a number of other companies are trying. So Acceleron, instead, initially thought of sotatercept as an agent to treat bone loss. The thinking went that sotatercept might be a good candidate to treat the blood cancer multiple myeloma, because patients with the disease often have weak bones—they’re often diagnosed after a tumor-induced fracture. Sotatercept might be able to help.
Once again, however, Acceleron was surprised by its research. When the company put sotatercept into healthy human volunteers in 2008, it found that the boost it was giving peoples’ red blood cells was much higher than its scientists had seen in animal tests—so much so that Acceleron ran the risk of spiking patients’ hemoglobin too high, too rapidly, and triggering a big cardiovascular problem. Such effects were the reason that Epogen and Aranesp were slapped with black box warnings in 2007. The results were a setback for Acceleron, since a dose high enough to remedy bones could also raise hemoglobin to dangerous levels.
“That was a little unfortunate for us,” Knopf says. “At that point in time, here we had this product that was very effective on red cells, but we really didn’t have a disease to go after.”
But surely the drug must be useful for something, Acceleron execs thought. Company scientists dug a little deeper into the mechanism of how the drug stimulated more red blood cells, looking for clues. What Acceleron found, Knopf says, was that stem cells go through a “discreet series of steps” on their way to becoming full-blown red blood cells, and that sotatercept appears to have an impact on later steps—it unblocks a process that keeps red blood precursor cells from maturing properly (Acceleron published a peer-reviewed paper characterizing this effect in March). Recombinant erythropoietin, by comparison, is a variant of a protein that works at the very first step, signaling to the bone marrow to make more red blood cells.
That difference is important, because it made sotatercept a candidate for treating a group of anemias caused by defects in the later stages of red blood cell production, where engineered erythropoietin isn’t effective. What’s more, it just so happens that those anemias—like beta-thalassemia and myelodysplastic syndrome (or MDS, when the bone marrow doesn’t produce enough healthy blood cells)—are rare disorders with few current treatment options.
“It was a little bit of luck, which we’ll take, [and] is important in drug development, that we came up with a drug that targets a particular anemia that has a high unmet need,” Knopf says.
Acceleron was also fortunate because partner Celgene wasn’t just solely thinking about sotatercept as a multiple myeloma drug. Rather, Knopf says Celgene was interested in its impact both on bone formation and anemia. The two companies initially cut a deal in 2008 to co-develop sotatercept, and when they did, called the drug prospect a “novel bone-forming compound.” But the focus has since shifted, and Celgene’s investment in the drug, and Acceleron, has deepened. Celgene has poured more than $200 million into Acceleron to date, according to chief business officer Steven Ertel. It’s gained rights to co-develop sotatercept for a range of diseases, and is covering the cost for a slate of Phase 2 studies in beta-thalassemia, MDS, and even multiple myeloma and kidney disease-related mineral and bone disorder, a common problem for people on dialysis. (Acceleron paid for the earlier studies, and would split sales in North America and get a more than 20 percent royalty on sales elsewhere if the drug succeeds.) The two companies are also working together on a second, similar protein drug known as ACE-536, also for beta-thalassemia and MDS. Acceleron doesn’t have a partnership in place for its third drug, dalantercept, a prospective cancer treatment.
“You see [it a lot] with biotech companies—if [a drug] fails in one particular indication, a lot of times the partner will run off,” Knopf says. “So in this case, it worked out well.”
Celgene’s support, in part, helped fuel Acceleron’s IPO. The company upsized its offering and priced in September at the top of its proposed $13 to $15 per share range. Knopf says Acceleron could have priced higher, around $18 per share. But the company chose not to, and to go public ahead of pending data on beta-thalessemia at the American Society of Hematology’s annual meeting in December instead, to reward investors with near-term gains and establish trust with its backers. Indeed, Acceleron’s stock ran up through the meeting, and Acceleron immediately priced a follow-on offering at $50 per share, raising $129 million without excessive dilution. Shares now trade at about $26 apiece, almost double the IPO price, although they closed as high as $52.27 apiece in March before an overall pullback in biotech stocks.
None of this, of course, means that Acceleron’s drugs will succeed—just that through a series of moves, the company has maneuvered itself into a chance. Acceleron is going to need its good fortune to continue in the Phase 2 studies—enough increases in hemoglobin, without the big safety worries—and in the first of Acceleron’s Phase 3 studies, which are planned to start early next year, according to Knopf. In beta-thalassemia, Acceleron will also have to keep an eye on Bluebird, whose shares skyrocketed after its gene therapy, Lenti-Globin, helped a couple patients kick their transfusions in a matter of days—small, but promising results. Still, even with that potential battle looming, Knopf thinks there’ll be plenty of room for treatment options.
“The really unique thing is that there’s no competition other than this very early work of Bluebird that’s in the gene therapy space,” Knopf says. “You just don’t find that very much these days.”