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Friday, October 30, 2009
Third Rock rests VC hopes in rare genetic disease treatments
By Julie M. Donnelly
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Third Rock Ventures is betting that rare genetic disease drug candidates are going to be favored targets for pharmaceutical companies looking for new acquisitions.
The two-year-old life sciences venture capital firm has just launched its first portfolio company in the rare genetic disease space, called Edimer Pharmaceuticals Inc. Third Rock plans to announce the formation of at least one more company geared towards orphan diseases in the coming weeks.
“The first priority is to make a difference for these patients. You‘d almost do this for free if you saw these kids,” said Nick Leschly, a partner at Third Rock.
Edimer Pharmaceuticals is a company with a single drug target and a single mission — to treat a rare disorder that mainly affects boys called X-linked Hypohidrotic Ectodermal Dysplasia (XLHED). There is currently no approved treatment for the disease, which causes teeth, hair, nails and sweat glands to be malformed. Children with the disease can easily become dangerously overheated because they can’t cool down through sweating. They can have trouble eating because some patients have no teeth.
Third Rock bought the technology of the Swiss company Edimer Pharmaceuticals, which had just one product in development — EDI200, a protein engineered to replace a naturally occurring protein called ectodysplasin A that is deficient in patients with XLHED.
Third Rock launched the company with the same name in the U.S. with a Series A financing that company officials say will last through approval of the drug target.
“We aren’t disclosing the amount of the funding because it is so large we’re afraid it could create outsized expectations in the patient community,” Leschly said.
Neil Kirby, a longtime biotech veteran who has worked for both Biogen Idec Inc. and Vertex Pharmaceuticals Inc., was brought in to be the company’s CEO in July. Leschly said Kirby was chosen for his long experience in working on rare diseases.
“There’s a real important, unmet need. And a number of companies like Shire and Genzyme have done very well in this space,” he said.
All biotech startups are swimming in risk, but investing in a company like Edimer takes particular fortitude. First of all, there is only one drug target in development. Either it succeeds or fails, and there is no chance it will work for another disease, as with some oncology drug targets. Even if the potential treatment is successful, the market for the drug is expected to be just several hundred patients.
But Leschly said there are several advantages. First of all, the drug trials will have many fewer patients and this will bring down the cost of the trials significantly. Secondly, he said, “There is just one cause of this disease, and we know what it is. It’s much simpler than a disease with many different potential causes, like cancer.”
Leschly said the market for the drug could be larger than expected because often patients come out of the woodwork once a treatment is approved. He said there also may be the possibility of treating the female carriers of the disease, who may exhibit mild symptoms but have the capacity to pass on the disease to their sons.
Analysts say the size of the market may not be a problem because $1 billion blockbuster drugs are rare these days.
“What big pharma is looking for right now is ‘mini-busters’. They aren’t turning up their noses at drug targets that may only rake in $150 million per year,” Joe Schwartz from Leerink Swann said. Schwartz said that since there is a small, motivated pool of patients, a pharmaceutical company would need just a small highly targeted sales force to sell it.
Third Rock plans to run Edimer as a virtual company. Edimer’s three employees are currently working out of the Third Rock Ventures’ offices. They will soon move to Edimer’s own digs in Kendall Square on Broadway Street and the company plans to hire five or six employees by the middle of next year. The drug candidate is currently being tested in mice and dogs and Edimer plans to contract out all of its research.
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