Seattle-based Presage Biosciences has a big dream for a biotech startup—and now it has seed capital to put that dream to the test.
Presage, a spinoff from the Fred Hutchinson Cancer Research Center, is announcing today it has raised $3.1 million from angel investors to get the company off the ground at a $5 million pre-money valuation. Presage isn’t saying who invested, but they are all individuals, mainly from the Seattle area, with IT and biotech backgrounds. The board is composed of founder Jim Olson, a cancer researcher at the Hutch; CEO Thane Kreiner, a former senior vice president at Santa Clara, CA-based Affymetrix (NASDAQ: AFFX); James Towne, an early president of Microsoft; and biotech entrepreneur George Todaro.
The idea at Presage is to radically improve the odds that cancer drug candidates will successfully navigate through clinical trials. Only about one out of every 10 cancer drugs that enters clinical trials ever makes it through the hoops necessary to become an FDA approved product. That means Big Pharma and biotech companies waste a huge amount of time and money on duds. Cancer treatment is a huge business, with a global market worth $66 billion a year, and is predicted to grow to $84 billion by 2012, according to Cowen & Company. With a market that big, more than 860 cancer drugs are in development, according to a survey last year by the Pharmaceutical Research and Manufacturers Association.
“We can help halt inefficient programs at the early stages before Big Pharma companies put millions of dollars into programs that are going to fail,” Olson says. “We can help weed out the winners from the losers early on.”
Presage has already struck a deal with a pharmaceutical company that wishes to remain anonymous, and it is generating revenue, Kreiner says. The startup has six employees, and is looking for lab space in Seattle. It’s possible that with a couple more pharmaceutical customers, Presage could turn profitable by the end of 2011, Kreiner says.
The way Presage hopes to pick cancer drug winners is unorthodox. It has developed a device with five needles that have holes along the sides. 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 doctors can see how different regions of the same tumor respond to different drugs in their native environment.
The company’s original plan, described in this feature story in May, was to perform those tests on tumors from individual patients to give physicians a better idea of which drug to prescribe. But since this meant the device would be classified as a diagnostic, it would be subject to FDA review. And the FDA hasn’t seen a device quite like this for cancer, so the regulatory pathway was too uncertain for investors, Kreiner says. So, partly in order to avoid dealing with regulatory uncertainty at the FDA, Presage decided to revamp its business plan to strike partnerships with cancer drug developers looking to improve their success rate in development.
The way this works, a drug company sends candidates to Presage, which then injects the drugs into human tumors that have been banked in a way that keeps their natural microenvironment intact (things like molecules and blood vessels that feed a tumor and allow it to spread). Presage injects the tumors with the drug candidates in question, comparing different combinations, and different doses.
This Presage model is thought to be more predictive than traditional models. One typical technique for early drug discovery involves a using preserved piece of tumor that’s queried against a drug on a microscope slide. Another common technique uses tissue culture in a petri dish, in which cancer cells are grown in an artificial environment and the cells develop genetic and genomic changes that aren’t seen in the native tumor microenvironment, Kreiner says.
Olson’s lab has shown some of this predictive advantage over standard mouse models in studies of a malignant brain tumor known as medulloblastoma. After the Presage technology demonstrated a drug had anti-tumor activity and an impact on the microenvironment, researchers followed up, and saw that all of the mice who got the drug lived, while all who didn’t died.
While that’s a clear result from the lab bench, I wondered if pharmaceutical companies will need to see overwhelming proof from clinical trials before they’ll start buying this as a new predictive tool. After all, cancer has been cured many times in mice, but not in people. So, like many things in biology, the usefulness of this technology will be proven out over time.
A lot of sweat equity has already gone into the company. Since Presage got going in the fall of 2008, everyone who worked on it received equity, and no salary, Olson says. Olson is personally keeping his day job as a Hutch researcher, and clinician at Seattle Children’s Hospital, while squeezing in work at the company on nights and weekends. The Hutch itself is retaining some equity in the company, so it stands to gain if Presage is successful.
“I was impressed by how quickly Jim Olson assembled a qualified management team that had expertise in the various disciplines required to get the company off the ground,” says Ulrich Mueller, the vice president of tech transfer at the Hutch.
It’s still too early to project how much potential Presage has as a business. Each deal with each pharma customer is going to be structured differently, so Kreiner didn’t want to reveal specifics about whether Presage will get milestone or royalty payments on drugs developed with its system. But Kreiner said these deals won’t be simple cash fee-for-service arrangements, and that the deals will reflect the value that Presage is providing to Big Pharma customers, which could use that information to develop products with multi-billion dollar potential.
“Our goal is really to change the success rate in clinical trials from about 10 percent now, to about 50 percent,” Kreiner says. “If we can help get five times more drugs through clinical trials, establishing their profiles for safety and efficacy, then we will have benefitted patients.”
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