Pharma pink-slippers find pot of gold
NORWOOD, Mass.—Just a few years after rising from the ashes of a pharma company "restructuring," Boston Biomedical Inc. (BBI), a private biotechnology company with a clinical-stage product pipeline targeting cancer stem cells (CSCs), has been acquired by top Japanese pharma Dainippon Sumitomo Pharma 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 sales milestone payments to acquire BBI, which was founded in November 2006 by Dr. Chiang J. Li to provide employment for approximately 30 R&D scientists facing layoffs from Woburn, Mass.-based biotech ArQule. The transaction is expected to be finalized sometime this month.
The acquisition gives DSP a solid foothold in the oncology space—a new focus for the company, which has until now concentrated its research efforts in the area of central nervous system (CNS) diseases—with a unique pipeline of drug candidates that target CSCs.
"DSP made a decision to focus on the cancer area," says Roger Matthews, a spokesman for DSP. "However, there are many companies with oncology businesses, and we considered that to enter this area we would need a novel approach. BBI's pipeline targets cancer stem cells, so this acquisition fits into our strategy."
That pipeline includes BBI608, a first-in-class cancer stemness inhibitor currently in the preparatory stage for Phase III trials for colorectal cancer in North America, as well as Phase Ib trials and Phase II trials for multiple solid tumors. BBI608 is actually what brought DSP and BBI together, as in March 2011, DSP signed an exclusive product option license agreement with BBI on the rights of development and commercialization of BBI608 in Japan for all indications of cancer.
"After execution of the option agreement with BBI, DSP recognized BBI's innovative development pipeline and its excellent ability of drug discovery and development, which led to DSP's decision to acquire BBI," says Matthews.
Also in the hopper is BBI503, a first-in-class cancer stemness kinase inhibitor currently in multicenter Phase I clinical trials in North America for advanced solid tumors. BBI's work on "cancer stemness" was particularly attractive to DSP, as it has received a number of recognitions and awards in the United States, including the Frost & Sullivan 2010 North American Drug Discovery Technology Innovation of the Year Award and a 2011 Biotech Pioneer Award at the Alexandria Oncology Summit.
"We see these as an expected growth driver from 2015 onward," Matthews says of BBI's programs.
The acquisition also gives DSP an opportunity to establish R&D operations in the United States, Matthews adds.
"Our current footprint in the U.S. is centered around our wholly owned subsidiary, Sunovion Pharmaceuticals Inc., with expertise in treatment for CNS and respiratory diseases. Acquiring BBI, we obtain R&D personnel with high expertise and an excellent drug discovery platform. Using this as a base, we plan to establish a global R&D organization in oncology for the DSP Group, starting in the U.S.," he says.
For BBI, the acquisition is a happy ending to a tremulous start and a tumultuous few years. In 2006, when ArQule prepared to lay off 28 employees, Li decided to form a new company to house the affected workers. He did so in the form of a unique $5 million contract with ArQule that outsourced early research work to BBI for a period of eight months—providing nearly three dozen employees with jobs and saving ArQule significant costs in the process.
"As a biotech executive, I understand the harsh realities of running a business, but I wanted to think more creatively about how to create a situation that would be good for both the company and the employee. I had a deep conviction that we could do this, and in the process, save jobs for the employee and avoid any negative impact on the company. It truly was a win-win situation."
Because ArQule did not take an equity stake in BBI or transfer any intellectual property, BBI is not considered a spinoff of ArQule, but is instead a completely separate entity. After completing its contract with ArQule, 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 great recession 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 a single person lost a job."
Once the acquisition is complete, Boston Biomedical will become a fully owned subsidiary of DSP. Operations will continue in the Boston area. BBI's employees will remain with the company, and DSP's significant investment will enable the company to increase its R&D manpower.
CSCs represent an emerging approach for designing the next generation of oncology therapeutics, Li says, because they are considered to be fundamentally responsible for malignant growth, metastasis and recurrence. These cells are a subpopulation of cancer cells that have self-renewing abilities and can differentiate into the heterogeneous cancer cells that comprise the bulk of the 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. Targeting CSCs, therefore, holds great promise for fundamentally advancing cancer treatment, says Li.
"The ability to inhibit cancer stem cells is a very differentiating feature," he notes. "DSP was not looking for something they already have. With our two programs, I hope that before too long, we can see these programs start to benefit patients."