Pharma pink-slippers find pot of gold
Six years after founding company for downsized R&D scientists, Boston Biomedical is acquired by Japanese pharma DSP for $2.63 billion
NORWOOD, Mass.—Just a few years after rising from the ashesof a pharma company "restructuring," Boston Biomedical Inc. (BBI), a privatebiotechnology company with a clinical-stage product pipeline targeting cancerstem cells (CSCs), has been acquired by top Japanese pharma Dainippon SumitomoPharma Co. Ltd. (DSP) for as much as $2.63 billion.
As announced on March 1, DSP will pay $200 million up front,$540 million in development milestone payments and up to $1.89 billion in salesmilestone payments to acquire BBI, which was founded in November 2006 by Dr.Chiang J. Li to provide employment for approximately 30 R&D scientistsfacing layoffs from Woburn, Mass.-based biotech ArQule. The transaction isexpected to be finalized sometime this month.
The acquisition gives DSP a solid foothold in the oncologyspace—a new focus for the company, which has until now concentrated itsresearch efforts in the area of central nervous system (CNS) diseases—with aunique pipeline of drug candidates that target CSCs.
"DSP made a decision to focus on the cancer area," saysRoger Matthews, a spokesman for DSP. "However, there are many companies withoncology businesses, and we considered that to enter this area we would need anovel approach. BBI's pipeline targets cancer stem cells, so this acquisitionfits into our strategy."
That pipeline includes BBI608, a first-in-class cancerstemness inhibitor currently in the preparatory stage for Phase III trials forcolorectal cancer in North America, as well as Phase Ib trials and Phase IItrials for multiple solid tumors. BBI608 is actually what brought DSP and BBItogether, as in March 2011, DSP signed an exclusive product option licenseagreement with BBI on the rights of development and commercialization of BBI608in Japan for all indications of cancer.
"After execution of the option agreement with BBI, DSPrecognized BBI's innovative development pipeline and its excellent ability ofdrug discovery and development, which led to DSP's decision to acquire BBI,"says Matthews.
Also in the hopper is BBI503, a first-in-class cancerstemness kinase inhibitor currently in multicenter Phase I clinical trials inNorth America for advanced solid tumors. BBI's work on "cancer stemness" wasparticularly attractive to DSP, as it has received a number of recognitions andawards in the United States, including the Frost & Sullivan 2010 NorthAmerican Drug Discovery Technology Innovation of the Year Award and a 2011Biotech Pioneer Award at the Alexandria Oncology Summit.
"We see these as an expected growth driver from 2015onward," Matthews says of BBI's programs.
The acquisition also gives DSP an opportunity to establishR&D operations in the United States, Matthews adds.
"Our current footprint in the U.S. is centered around ourwholly owned subsidiary, Sunovion Pharmaceuticals Inc., with expertise intreatment for CNS and respiratory diseases. Acquiring BBI, we obtain R&Dpersonnel with high expertise and an excellent drug discovery platform. Usingthis as a base, we plan to establish a global R&D organization in oncologyfor the DSP Group, starting in the U.S.," he says.
For BBI, the acquisition is a happy ending to a tremulousstart and a tumultuous few years. In 2006, when ArQule prepared to lay off 28employees, Li decided to form a new company to house the affected workers. Hedid so in the form of a unique $5 million contract with ArQule that outsourcedearly research work to BBI for a period of eight months—providing nearly threedozen employees with jobs and saving ArQule significant costs in the process.
"As a biotech executive, I understand the harsh realities ofrunning a business, but I wanted to think more creatively about how to create asituation that would be good for both the company and the employee. I had adeep conviction that we could do this, and in the process, save jobs for theemployee and avoid any negative impact on the company. It truly was a win-winsituation."
Because ArQule did not take an equity stake in BBI ortransfer any intellectual property, BBI is not considered a spinoff of ArQule,but is instead a completely separate entity. After completing its contract withArQule, BBI was further challenged first by the economy's subsequent nosedive,then by government restrictions on stem cell research.
"By the time we finished the ArQule contract, the greatrecession of 2008 hit. It was a hard time for an entrepreneurs," Li reflects."But we managed to create an innovative company, and in the process, not asingle person lost a job."
Once the acquisition is complete, Boston Biomedical willbecome a fully owned subsidiary of DSP. Operations will continue in the Bostonarea. BBI's employees will remain with the company, and DSP's significantinvestment will enable the company to increase its R&D manpower.
CSCs represent an emerging approach for designing the nextgeneration of oncology therapeutics, Li says, because they are considered to befundamentally responsible for malignant growth, metastasis and recurrence. Thesecells are a subpopulation of cancer cells that have self-renewing abilities andcan differentiate into the heterogeneous cancer cells that comprise the bulk ofthe tumor mass. CSCs have been isolated from almost every major type of cancer,and have been found to be intrinsically resistant to current cancer therapies. TargetingCSCs, therefore, holds great promise for fundamentally advancing cancertreatment, says Li.
"The ability to inhibit cancer stem cells is a verydifferentiating feature," he notes. "DSP was not looking for something theyalready have. With our two programs, I hope that before too long, we can seethese programs start to benefit patients."