Alder Scores Deal With Bristol-Myers Potentially Worth $1 Billion
Alder Biopharmaceuticals has just struck one of the biggest biotech partnerships of the year, both in the Seattle area and nationally. The Bothell, WA-based developer of faster and cheaper technology for making antibody drugs has formed a collaboration with Bristol-Myers Squibb (NYSE: BMY), focused on the development of Alder’s experimental rheumatoid arthritis drug, that could be worth more than $1 billion.
Under the deal, Alder will grant a worldwide exclusive license to Bristol to develop ALD518 for all potential uses except cancer; Bristol will get an option to market the drug as a treatment for cancer outside the U.S. In return, Alder will get $85 million in upfront cash, as much as $764 million in payments for reaching development and regulatory milestones, sales-related milestone payments that could exceed $200 million, and an undisclosed royalty rate on product sales. Alder may also require Bristol to make a $20 million equity investment to support an initial public offering, if it chooses to go that route.
Alder’s big idea is to manufacture antibody drugs in yeast instead of in traditional mammalian cells. This enables the company to make “fast-follower” drugs that are faster and cheaper to produce, and that also may have improved properties like less frequent dosing, Alder CEO Randy Schatzman has told Xconomy. In the case of ALD518, Alder has developed an antibody to follow Roche’s tocilizumab (Actemra). The Roche drug, the first in its class, is an antibody designed to block the receptor of an inflammatory protein called IL-6 that hammers the joints of rheumatoid arthritis patients. This approach could offer doctors an alternative to the $10 billion-a-year class of drugs that block a different protein called TNF, like Amgen’s etanercept (Enbrel) and Abbott Laboratories’ adalimumab (Humira). Analysts have predicted sales of the Roche drug could capture a tidy portion of this huge market, with sales of $2 billion a year.
Alder has designed its antibody to block the IL-6 protein target. The Alder drug, ALD518, is designed to last longer in the bloodstream, so it can be given less frequently, possibly as little as three or four times a year instead of once a month, Schatzman has said. It is much more potent, so it can be given in one-tenth the dose, which is one reason it should be much cheaper to manufacture. The drug is also engineered to avoid dangerous immune system reactions that other antibodies can sometimes provoke.
“With its novel mechanism of action, ALD518 has the potential to offer an exciting new option for patients with rheumatoid arthritis,” said Brian Daniels, Bristol’s senior vice president, global development and medical affairs in a statement. “We are pleased to have the opportunity to develop this novel monoclonal antibody.”
Alder has completed a Phase II trial with about 120 patients who got ALD518 for rheumatoid arthritis, although it hasn’t made the results of that study public. But the company was actively deal-hunting at the American College of Rheumatology conference in Philadelphia last month.
The deal with Bristol is that company’s second big partnership with a Seattle biotech company this year, after an alliance with ZymoGenetics that it formed in January. That collaboration could also be worth more than $1 billion over time, to co-develop and market a new interferon drug with fewer side effects for hepatitis C patients. It’s also the second partnership for Alder this year, after it agreed in June to develop new antibodies for Schering-Plough, which wants to test them for a neurological disease.
Alder was founded in 2004 after Celltech R&D closed its doors in Washington and a core scientific group stuck together to start something new. It is now one of the better-financed development-stage biotechs in Seattle. It pulled in a $40 million Series C round in January 2008 from Delphi Ventures, TPG Biotech, Sevin Rosen Funds, Ventures West, HIG Ventures, and WRF Capital.