The Fate Therapeutics mini-empire already extends from coast to coast, and now it’s expanding northward. The San Diego-based developer of stem cell technologies has agreed to acquire Ottawa, Canada-based Verio Therapeutics to grab a few more bright minds, and some clever techniques for developing drugs that spark the body to regenerate damaged tissue.
Financial terms of the deal aren’t being disclosed, but it’s safe to say this won’t break the bank at Fate, which raised $30 million in a Series B venture round last November. The acquisition means that Fate will now have its headquarters in San Diego, a new operation in Ottawa, and research labs that it sponsors in Seattle and Boston, says spokeswoman Jessica Yingling. The combined company will have 40 employees, and enough cash to operate for two years, she says.
So if this deal doesn’t really amount to much money, why does it matter? Fate, as avid readers know quite well, took a big step forward last fall, when one of its founders showed that he could coax ordinary adult cells to morph into an embryonic-like state with a combination of cheap and readily available small-molecule drugs. This is important because it could be useful for generating human tissues in the lab for use in drug discovery—and it could make it practical for the first time for Big Pharma companies to do so at an “industrialized” scale.
Even a few months before Fate co-founder Sheng Ding published his big discovery, Fate noticed an important, and potentially complementary, discovery from its Canadian peers at Verio Therapeutics. A team led by Michael Rudnicki, a Verio co-founder and regenerative medicine researcher at the University of Ottawa, published a paper last year that showed it could identify certain stem cells that act as progenitors for skeletal muscles, as well as the molecular pathways involved in the cells’ transformation into muscle. What’s more, the researches showed that certain biologic molecules could activate those pathways to regenerate muscle tissue. The work was published last June in the journal Cell Stem Cell.
That’s important for Fate, because the company is looking for specific molecular pathways that can be activated in the body—particularly with conventional small molecule drugs—to trigger a regenerative effect. That’s thought to be a more efficient, and less risky, way to stimulate regeneration of tissues than the “cell therapies” most people think when they think of stem-cell based treatments. Fate, at least in its early days, isn’t concentrating on creating such therapies, which would involve injecting patients with stem cells that are thought to be able to regenerate damaged cells. Instead, it wants to use the knowledge it gleans from stem-cell science to come up with drugs that can coax the body’s existing cells into repairing or regenerating damaged tissues.
For its part, Verio already has several biologic drug candidates that might someday be useful for regenerating the insulin-producing pancreatic beta cells that are damaged in diabetes and for regenerating heart cells that have been damaged in a heart attack.
“The Verio group has a lot of experience in identifying stem cells in the body and finding pathways to modulate them,” says Fate Therapeutics spokeswoman Jessica Yingling. “There really aren’t that many people out there taking the stem cell modulation approach, and it seemed like a perfect fit.”
Verio was founded in 2008, and raised a small seed round of financing of about $1 million, Yingling says. CEO Frank Gleeson will stay on board with Fate to run the Ottawa branch, and Verio’s scientific co-founders, Rudnicki and Lynn Arthur Megeney, will be retained on the Fate scientific advisory board, Yingling says. Those two join a stellar group of scientific founders that includes Ding of The Scripps Research Institute, Randall Moon of the University of Washington, Rudolf Jaenisch of MIT and the Whitehead Institute, and Leonard Zon and David Scadden of Harvard Medical School.
By getting a toehold in Canada, Fate will also be able to access the support from the Canadian government—which hasn’t enacted the same kinds of restrictions that hung over the stem cell field in the U.S. during the last decade. Gleeson has a lot of contacts in Canada as a founding venture capitalist of a dozen biotech companies there, and a seat on the board of directors of the Stem Cell Network of Canada. So I wouldn’t be the least bit surprised if Fate is able to secure some support for its research from the friendly taxpayers to our north.
“Canada has been very advanced in stem cell research for a long time,” Yingling says. “They have a strong history, and the government has been very supportive of stem cell research.”
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