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SAN DIEGO—In mid-March, Array BioPharma Inc. and VentiRx Pharmaceuticals Inc. announced a licensing agreement under which VentiRx receives exclusive worldwide rights for discovery and development using Array's Toll-like receptor (TLR) program. VentiRx will begin by developing two candidates in oncology and allergy.
 
Few financial aspects of the deal were disclosed, but David Snitman, Ph.D., COO and vice president of business development at Boulder, Colo.-based Array, says the company will receive an upfront payment from VentiRx. "We have also provided equity in this new company, and we will receive milestones and royalties on sales of products." Array retains the option to buy back into the oncology product, for 50 percent ownership, prior to Phase 3.
 
Michael Kamdar, executive vice president and CBO at VentiRx, says the arrangement combines traditional and nontraditional elements. "Outside of oncology, all other indications are really VentiRx," he says. "We have the right to develop them, and there's no opt-in for Array."
 
Kamdar and Robert Hershberg founded VentiRx in June 2006, and a search for assets to leverage their TLR experience turned up Array. "I think [Array has] a strong proven track record for bringing a number of compounds into the clinic, either for their own benefits or as part of a partnership," says Kamdar. "We really liked the assets. These are small molecule, TLR-7 and TLR-8, both agonists and antagonists."
 
Snitman says VentiRx interested Array because of experience with TLRs and developing immunological agents with activity in oncology. "It's a startup company. This is its first asset," he says. But the companies also share investors—ARCH Venture Partners and Frazier Healthcare Ventures. "We know all the players, and they're a very high-quality team," says Snitman. "They're putting a lot of money to work to progress the assets that we're putting into this company into clinical development. Their focus is really going to be moving these assets toward the clinic and, hopefully, toward commercialization."
 
A recent Series A financing of $26.6 million, led by Frazier, ARCH, and Domain Associates, added to $2.3 million in seed money, enabling VentiRx to acquire Array's TLR program. Kamdar says VentiRx's staff is growing from four to 12 in its San Diego and Seattle locations. "We have increased the staff and primarily these increases are additional preclinical and clinical development capabilities, regulatory functions, project management," he says. He sees some of the Array assets as development candidates already and says VentiRx will outsource functions like scale-up and toxicity. Kamdar expects to hit the clinic next year and believes VentiRx has ample resources to get to proof of concept for oncology within the timeframe of the funding.
 
Despite lean operations, Kamdar says VentiRx is already prepared to consider other assets, preferably in TLR. He sees VentiRx's two-city model, plus a partner in Boulder, as an advantage because he and Hershberg can draw from two talent pools. "It really is an interesting model for how biotech can advance important programs," he says.
 
Array's growth was also somewhat unusual. Snitman says Array developed its drug discovery platform with minimal financing via collaborations with biotech and pharmaceutical companies on discovery and library projects, drawing $200 million of revenue, as a result. "This allowed us to build the drug discovery platform that we have today. That was the goal, to do this with minimal financing and to build a research organization of some 200 scientists in multiple disciplines." Founded in 1998, Array already has five drugs in clinical development, says Snitman, plus a large enough portfolio of preclinical assets that it felt the complex TLR program would be best developed outside the company.
 
The foundation of Array's approach is an electronic notebook system that minimizes paper and enables real-time information sharing. Array built the system through collaborations—notably with CambridgeSoft—incorporating knowledge of teamwork gained in projects with companies like Genentech. The resulting efficiencies have produced a typical IND cost, including failures, of less than $15 million, says Snitman.

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