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Biogen, Arsia Team Up to Improve Hemophilia Drugs in $100M Pact

Xconomy Boston — 

Protein drugs have become a critical part of healthcare. They attack diseases differently than old fashioned small molecule drugs, and have helped the biotech industry rise to prominence over the past few decades.

But proteins have their limitations. Many have to be taken frequently, or infused in hospitals, to work the way they should. Lessening that burden could provide a big convenience to patients, something a startup called Arsia Therapeutics is trying help out with.

Arsia, of Cambridge, MA, hasn’t made many public announcements since venture firm Polaris Partners seeded it two years ago. But today the company is revealing a partnership with biotech giant Biogen (NASDAQ: BIIB), which will use the startup’s technology to develop injectable versions of hemophilia drugs that currently have to be given via infusions. Arsia isn’t saying how much it’s getting from Biogen up front to do this work, but the startup could get over $100 million in downstream payments, and royalties later on, if these products progress.

That’s peanuts for Biogen, which makes billions of dollars each year, largely from its multiple sclerosis drugs. But the deal is more noteworthy for Arsia, because partnerships like this have enabled the startup to achieve something unusual for a two-year-old biotech startup—self-sufficiency.

Arsia CEO and Polaris venture partner Amy Schulman (pictured above), a former Pfizer executive, says the Biogen deal is one of 12 partnerships Arsia already has. She won’t name the others, but she says that these alliances have enabled Arsia to grow in an unusual way for a startup biotech. Because these agreements haven’t been publicly disclosed, it’s tough to tell exactly how successful Arsia has been, or how far along these agreements are. Schulman would only say is the Biogen deal is the first one Arsia found “appropriate to announce publicly.” (Arsia’s statement indicates it’s the largest of the company’s partnerships so far.)

Nonetheless, with just a “fairly generous” seed round from Polaris, Schulman says the company is at the point where it has no need—currently, anyway—to bring other investors in and raise more money. “We are chugging along self-sufficiently,” she says.  “I have no current plans at all to look for financing.”

One of the reasons Arsia can do this is that it’s not developing its own drugs, which would require years of work and hundreds of millions of dollars. The high costs of drug development are why your average biotech has to bring in a syndicate of investors and either go public or sell itself to a bigger company with deep pockets. Arsia, co-founded by Polaris’s Alan Crane and MIT’s Bob Langer and Alexander Klibanov, never intended to go this route. “We weren’t confused as a company about the need to develop our own proprietary pipeline of products,” Schulman says.

Instead, Polaris assembled a small team of scientists around Arsia’s technology—a proprietary library of “excipients,” molecules that are mixed with a drug’s active ingredients to give it the right consistency—with the goal of working with other companies to improve their drugs. The model was, as Schulman says, to “live and die by the success of…collaborations.”

That meant Arsia could keep the expenses low, while having a better chance at revenue out of the gate, albeit without the upside a successful drug can generate. It also meant Arsia needed to find a worthy problem to solve. Schulman says that started out with “early stage formulation work”—improving the properties of experimental drug candidates that, for one reason or another, weren’t good enough to move forward. Arsia still does this, but found that bigger bucks were to be had elsewhere. “It helps pay the rent, it’s important work, but it’s not transformative,” Schulman says.

Instead, Arsia focused on reformulating established protein drugs in ways that could improve their value. Protein drugs tend to be very viscous, and because of that, they typically they have to be diluted and administered in a large volume to get to the desired dose. Arsia’s additives make these drugs less viscous without diluting them, meaning you can get more drug for less volume.

What this means, practically speaking, is that a drug that previously had to be infused via an IV might now be able to be injected subcutaneously, and a drug that was already injectable but required frequent doses could be administered less often. It also could help a drug company create a new drug out of an old one. A reformulated hemophilia drug taken as a subcutaneous injection at home, rather than an in-hospital infusion, for example, could get a new patent life, keep generic competition at bay, and command higher prices.

Biogen is known for its MS drugs, but won FDA approval of two drugs for hemophilia in 2014: Eloctate for hemophilia A and Alprolix for hemophilia B, both of which must be infused. A Biogen spokesperson wouldn’t say if the company intends to use Arsia’s technology to make injectable forms of those two drug in particular, just that the company is” exploring how this technology could be used across our hemophilia research.”