Presage Biosciences, the Fred Hutch Spinoff, Adds CEO, Angel Bucks, Big Pharma Customers
Quite a lot has happened at Presage Biosciences in just a couple months. This Seattle-based company, a spinoff from the Fred Hutchinson Cancer Research Center, has recruited a new CEO, raised another $1 million, found new labs, and snapped up two active contracts from Big Pharma customers.
Such are the heady early days for the team at Presage, which I met yesterday in their brand new lab at the Fairview Research Center in South Lake Union. The new CEO is Caitlin Cameron, the former top executive at Seattle-based Cellnetix Labs. The company has now raised $4 million in its Series A round after more angel investors piled in on the $3 million financing I covered back in March. And Presage now counts two of the world’s major drugmakers as paying customers for its technology, which was invented at the Hutch by pediatric oncologist Jim Olson.
The big idea at Presage is find a way to increase the pitiful batting average that cancer drugs have in clinical trials. Despite all kinds of expensive laboratory analyses, only about one out of 10 cancer drugs that enter clinical trials ever makes it through the hoops necessary to become an FDA-approved product. Even worse, most FDA-approved cancer drugs only work for one-fourth or maybe one-third of patients, and researchers often can’t predict who will respond in clinical trials. Big Pharma and biotech companies have a huge stake in separating the winning drugs from the losers, and identifying which patients are likely to respond. There are more than 860 cancer drugs in development, according to a survey last year by the Pharmaceutical Research and Manufacturers Association. The cancer drug market is expected to grow to $84 billion by 2012, according to an analysis by Cowen & Co.
“This is a company with tremendous potential,” Cameron says. “If, and I really mean when we’re successful, we’ll have a huge impact on the drug discovery process and cancer treatment.”
First things first, I had to ask about the personnel moves. Presage started off with a highly credible CEO in Thane Kreiner, a former senior vice president at Santa Clara, CA-based Affymetrix. He has stepped down from the leadership position at Presage, largely because he was based in the Bay Area and the company needed to be in Seattle near the Hutch, according to Nathan Caffo, the vice president of business development. Kreiner remains a senior advisor to the company, although he’s not full-time.
Cameron, a former AT&T executive who once ran a $1.2 billion business there, got her most recent experience in healthcare at Cellnetix Labs. It’s a contract pathology laboratory on First Hill that serves 11 hospitals in the Northwest. That company grew from 60 employees to 180 under her management the past four years, while increasing profits, and shortening lab turnaround times for hospitals—a key barometer of customer service in that industry, Cameron says.
Customer service also is at the heart of what Presage is doing, and its customers are Big Pharma and biotech companies. The company offers a fee-for-service arrangement that allows them to test a variety of new cancer drugs in mice.
That might sound ordinary, because drugs are tested in mice all the time, but nothing like the way Presage does it. The company has developed a device with five needles that have holes along the sides. As I described back in March, these needles can deliver five different kinds of chemotherapy drugs-or combinations of an experimental biotech treatment-to different localized regions of the tumor. The drugs are made to seep out within a small radius of the needle, so researchers can see how different regions of the same tumor respond to different drugs in their native environment in a head-to-head comparison. That’s different from other experiments in which one drug gets tested in one mouse, and scientists can’t really see how that individual mouse might respond differently to a different drug in real-time.
Presage isn’t identifying its customers, who often don’t want their competitors to know what new tools they are using. But Caffo says one customer has anted up for three different projects, while a second customer has one project, and a third contract is close to being signed. Presage structures these deals so its customer gets exclusive use of the technology for a narrow indication, like, say, a certain form of pancreatic cancer (my example, not theirs). The strategy is not to carpet-bomb the whole pharmaceutical industry, but to form deep bonds with a small number of repeat customers, Caffo says. “We want them to get addicted to it,” he says.
While Presage is still a startup, having those pharma contracts, and a $1.4 million grant from the National Institutes of Health to develop the technology, means that it is in stronger financial shape than most biotechs that seek to develop drugs. The company’s plan is to turn profitable by mid-2011, and at the moment anyway, it is ahead of schedule, Cameron says.
With revenue coming in from customers, from the NIH, and investors, Presage could choose to spend a fair bit, but they sure look to be operating lean. The company’s new lab space, which they moved into yesterday, is in a new building downstairs from Novo Nordisk and NanoString Technologies. Still, they negotiated with the landlord to get only as much space as the team of six needs at the moment, which could be expanded over time. The office only had folding wooden chairs to sit on, a few boxes that are still unpacked on the lab benches, and some like-new lab equipment that was purchased second-hand from biotech companies that ran into hard times in the downturn, Caffo says.
So far, Presage has been able to build its momentum partly because of the people it has been able to attract. Richard Klinghoffer, the vice president of biology, is one of them, a former research fellow at Merck’s Rosetta operation until that closed down. Klinghoffer noted that he’s been able to hand-pick a few of his best early hires, largely because Seattle is a small biotech community where people know each other, but also because not a lot of other places are hiring at the moment.
“It’s really a great time to be building a company,” Klinghoffer says.