VentiRx, Evangelist for Lean, Mean Virtual Way, Makes Progress With Cancer, Allergy Drugs

9/17/09Follow @xconomy

Virtual companies have been all the rage for some time with biotech venture capitalists, but I’ve been wondering whether this lean-and-mean outsource-darn-near-everything model is really a better way to develop drugs than the traditional soup-to-nuts approach at companies like Genentech. I haven’t seen a good academic paper on this question, and until I do, I’m going to keep asking people who live with this idea on a daily basis, like VentiRx scientific co-founder Rob Hershberg.

VentiRx, as I first described in this space back in January, personifies the trend toward small teams of experienced drug developers who rely on contractors to do a lot of the work. The company, which has a team of just a dozen people in Seattle and San Diego, raised $29 million in its Series A funding in March 2007 from Arch Venture Partners, Frazier Healthcare Ventures, and Domain Associates. VentiRx still has money left in the bank, so it’s apparently sipping fuel like a Honda Civic Hybrid, but the big question I had for Hershberg was this: What has this small team of committed people really accomplished?

The company hasn’t done anything to win headlines at a major medical meeting, but it has made a lot of the step-by-step progress that companies must make on the long slog to FDA approval. VentiRx now has two drug candidates whose safety has been demonstrated at a variety of doses in clinical trials for cancer and allergies. And prospective partners are starting to take a closer look, just as the VentiRx business model called for, Hershberg says.

At least one other virtual company, Brisbane, CA-based cancer drug developer BiPar Sciences, has proven that a virtual company can deliver bang-up results for a new drug, and made windfall profits for its investors when it sold to Sanofi-Aventis for $500 million earlier this year.

“There is really something to be said for focus,” Hershberg says. “I’m not saying the virtual model works in taking a drug all the way from the laboratory to the market. But in going from late-stage preclinical to proof-of-concept in people, like with a Phase Ib or Phase IIa clinical study, you can create a lot of value. It’s really an ideal structure. When you get into the later stage studies, that’s when bigger companies need to get engaged.”

The concept at VentiRx is that it could hit a goldmine if it can prove … Next Page »

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