Dragonfly Therapeutics, a stealthy startup formed by well-known cancer researchers on both coasts and backed by a high-powered group of family offices, has inked its first partnership. Celgene, of Summit, NJ, is paying Dragonfly $33 million up front for the chance to co-develop up to four blood cancer drugs.
The deal is a modest bet for Celgene (NASDAQ: CELG), which generates more than $11 billion a year, largely from lymphoma and multiple myeloma drugs, and has aligned itself with a slew of startups through creative partnerships over the years. But it’s the first stamp of validation for Cambridge, MA-based Dragonfly since it was formed in July 2015 by cancer research pioneer Tyler Jacks, his longtime friend, filmmaker and tech entrepreneur Bill Haney, and UC Berkeley immunologist David Raulet.
Through the agreement, Celgene gets the option to buy up to four experimental drugs from Dragonfly and develop them for acute myeloid leukemia, multiple myeloma, or other blood cancers. Haney (pictured above, left, with Jacks and Raulet), Dragonfly’s CEO, says Celgene will make these decisions before the drug candidates begin their first clinical trials. For each drug Celgene acquires, Dragonfly would get “considerable” upfront and downstream payments, as well as royalties, Haney says, though he wouldn’t specify how much. He also wouldn’t disclose how far Dragonfly’s drugs are from clinical testing.
Dragonfly is just one of many companies trying to develop drugs that can expand the reach of cancer immunotherapy, which, despite all of its progress over the past few years, still only helps a fraction of patients with certain cancers. New types of cancer vaccines, cell therapies, and cocktails of immunotherapy drugs are all progressing forward in clinical testing with the goal of either turning the non-responders into responders, or helping those who do respond to treatment live longer. Pharma companies are investing billions in a vast matrix of clinical trials hoping to hit on the best possible mix of drugs. To do so, they’ve been teaming with smaller biotechs through alliances, acquisitions, and other types of deals.
For startups, getting attention means cutting through the noise. Dragonfly is trying to do that by focusing on natural killer (NK) cells, which help the body battle viruses, parasites, and tumors, and alert other immune cells of threats. NK cells are members of the innate immune system, the body’s initial defense against foreign invaders. Most approved immunotherapies unleash the adaptive immune system, which learns to remember threats and eliminates them when they return.
Haney says Dragonfly is developing antibodies that can latch on to multiple targets. These antibodies, which Dragonfly calls “TriNKETS,” link NK cells to specific proteins that tumor cells express on their surface. When this happens, the NK cells both fight the tumor cells and alert other types of immune cells (B cells and T cells) of the cancer’s presence. The hope, he says, is for this approach to lead to a “uniquely powerful” cancer drug that doesn’t also cause dangerous side effects, though this has yet to be proven in humans. Dragonfly aims to test the drugs both as single agents and in tandem with other treatments, Haney says. (Dragonfly isn’t the only company looking into NK cells—France’s Innate Pharma, Los Angeles-based NantKwest, and San Diego-based Fate Therapeutics (NASDAQ: FATE), among others, are developing ways to harness NK cells or stimulate them with drugs to fight cancer.)
As Xconomy has written previously, Dragonfly is largely backed by family offices—among them members of the Disney family—not venture firms, as is typical in biotech. That has enabled Dragonfly’s founders to keep control of the company and get an unusually long financial runway for a startup. Though Celgene became an investor in May when Dragonfly closed a financing round of unspecified size, Haney says the company wasn’t looking for cash then; Celgene just wanted to buy into Dragonfly. The company now has more than five years worth of cash even without another dollar from Celgene or another partner, Haney says. The company would only raise more money “in the comfortably foreseeable future as a way to strengthen a collaboration,” he adds.
“The ownership structure that we have presently seems to us the best way to stay on mission,” Haney says.