Acucela, Strengthening Ties With Japan’s Otsuka, Gets Right to Develop New Glaucoma Drug

9/27/10Follow @xconomy

[Corrected: 9 am Pacific] Little biotech companies usually discover new drugs, and hand them off for development to a Big Pharma company with cash and expertise in running clinical trials. But one of the Seattle area’s little biotech companies, Acucela, is doing the exact opposite, and doing it in a profitable way.

Seattle-based Acucela is announcing today it struck a deal with Japan-based Otsuka Pharmaceutical to co-develop a new drug for glaucoma, a leading cause of blindness. Under the deal, Otsuka is taking one of the products it discovered internally, and now is essentially hiring Acucela to test it in early-stage clinical trials. After Phase II clinical trials are complete, Acucela will have the option to turn this into a deal in which both companies share the profits and expenses for the drug. Acucela will now hire more than a dozen more people, and get to work on initiating clinical trials in 2011. [Correction: An earlier version said the companies will share the profits and expenses equally on the glaucoma drug, but the actual split isn't being disclosed.]

This new partnership represents a growing bond between Acucela and Otsuka. The two companies started working together two years ago in the field of ophthalmology, co-developing a drug for dry eye and another for the “dry” form of age-related macular degeneration. Acucela CEO Ryo Kubota has been cultivating relationships with Japanese investors and pharmaceutical companies since his days on the University of Washington faculty in the 1990s, long before he founded Acucela in 2002. Now the small biotech has about 50 employees, operates profitably because of the work it does for partners, and doesn’t need to rely on venture capital anymore, Kubota says.

“Otsuka has been impressed with our development skill set, our expertise, and the trust they have in us has increased,” Kubota says. “So they went with us, knowing that there were a couple of other pharma companies interested in it.”

The two companies are going to work on a new strategy for treating glaucoma. This condition, which affects an estimated 3 million people in the U.S., is caused by a buildup of pressure in the eye, like high blood pressure, which chokes off circulation and damages nerve cells. Traditionally, doctors have treated it with beta-blocker heart drugs that are supposed to lower blood pressure, and prostaglandins that lower the pressure another way, Kubota says. The new idea is to stimulate fluid outflow from the eye by turning on the adenosine A2a receptor on cells. The drug candidate made to work this way, still in animal tests, is called OPA-6566.

Ryo Kubota

Ryo Kubota

By working with Otsuka under this arrangement, Acucela won’t have to put any of its own capital at risk until Phase 2 trials have been completed, and “glaucoma is extremely predictable after Phase 2,” Kubota says.

“We provide expertise. They provide money. Once we prove we have proof of concept of a drug, we’ll develop it with cost-sharing,” Kubota says. “We are essentially acquiring a molecule from the outside, which is very promising, and which is hard to come by for a small biotech. Usually it’s too expensive, but we were able to acquire this without any cash going out until we finish Phase II.”

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