Theraclone Strikes $632M Deal With Pfizer to Discover Antibodies for Cancer, Infections
[Correction: 6:38 pm] Theraclone Sciences just got a very big break. The Seattle-based biotech company has enticed Pfizer, the world’s largest drugmaker, to pay as much as $632 million over time for the right to co-develop antibody drugs based on Theraclone’s technology.
Pfizer (NYSE: PFE) is getting access to the Theraclone technology to hunt for antibody drugs against cancer and infectious diseases, according to news first reported today by The New York Times. Theraclone will work to develop antibodies against two biological targets related to infectious diseases, and two more related to cancer, says Theraclone’s vice president of finance, Russ Hawkinson. [Correction: An earlier version said Pfizer is getting exclusive access to Theraclone's technology against cancer and infectious diseases. It's only getting exclusive access to make drugs against the four designated targets for cancer and infectious diseases.]
Steve Gillis, the acting president of Theraclone and a managing director with Arch Venture Partners, told the Times that about 30 to 40 percent of the deal’s total value—or $189 million to $252 million—represents “near-term” money that Theraclone can receive if it hits milestones before mid-stage clinical trials. That’s opposed to so-called “bio-dollars” which might sound huge in a headline, but can be misleading because they often never materialize years later as drugs fail in development.
“The fact that Pfizer selected our antibody discovery technology is, I think, a great endorsement of our science and the speed with which we can make discoveries,” Gillis told the Times. Pfizer’s senior vice president and head of biotherapeutics research, Jose-Carlos Gutiérrez-Ramos, told the newspaper: “This fits in the big picture of us wanting to be on the leading edge of biotherapeutics and antibody discovery, and this is one company we are very excited to work with.”
The Pfizer deal truly represents a coup for Theraclone, which has had some wrenching ups and downs. CEO Dave Fanning died suddenly in June. Fanning had spent much of his time scouring the globe for partners to help push forward Theraclone’s antibody drug discovery programs at a time when traditional venture capital was increasingly hard to come by.
This deal does more than just provide validation of the Theraclone technology—it provides some vitally important cash. Theraclone isn’t disclosing how much cash it had left at the time of this new Pfizer deal, but the partnership means Theraclone won’t have to seek out new venture financing this year, Hawkinson says. And based on the new capital infusion, Theraclone plans to hire another four or five people over the coming year, building on its existing staff of 22, Hawkinson says. The partnership also leaves Theraclone the flexibility to strike more partnerships with other companies interested in directing antibodies against different targets, he says.
Theraclone, founded in 2006, is one of the original “graduates” of Accelerator, the Seattle-based startup machine. The founding concept was for scientists to look at blood or tissue samples from patients, and identify antibodies against viruses, bacteria, or cancer cells. Nature has evolved some very clever defense mechanisms against these provocateurs, so Theraclone has sought to identify some of these antibodies in blood and then copy some of the most potent ones as genetically engineered drugs. The company raised $29 million in March 2007 from Arch Venture Partners, Canaan Partners, HealthCare Ventures, Amgen Ventures, MPM Capital, and Alexandria Real Estate Equities.
Theraclone hasn’t advanced any of its own drug candidates into clinical trials, although it has generated some significant interest in its discovery work. The company struck a partnership in 2009 with Japan-based Zenyaku Kogyo worth $18 million to develop broadly neutralizing antibodies against flu virus, which could be stockpiled in case of a pandemic. That deal came about a month after Theraclone and its academic collaborators published an important paper in Science about how they had found two new antibodies against HIV that are thought to broadly neutralize many variations of the virus circulating around the world.
In addition to the discovery work for Pfizer, Theraclone is seeking to advance its own pipeline of drug candidates. The most advanced candidate, designed to fight flu virus, is scheduled to enter its first clinical trial in 2011, Hawkinson says.