fb-pixel Skip to main content

Biotechs strike partnerships to spread their costs, risks

SAN FRANCISCO - In long days packed with back-to-back meetings last week, Tillman Gerngross pressed drug company leaders from around the world to farm out some specialized research and development to his New Hampshire start-up, Adimab LLC.

Gerngross even bought advertisements promoting his biotech firm on this city’s fabled cable cars to catch executives’ attention as the cars rumbled down Powell Street past the Westin St. Francis hotel, where more than 8,000 life sciences movers and shakers congregated for the 30th annual J.P. Morgan Healthcare Conference.

“Pharmaceutical companies are tuning down their internal R&D,’’ said Gerngross, an engineering professor at Dartmouth College, who has booked business from Pfizer Inc., Merck & Co., Novartis AG, and Weston-based Biogen Idec Inc., and other drug makers. “That’s very positive for companies like ours.’’


Adimab, of Lebanon, N.H., was one of hundreds of smaller biotechnology and medical device firms seeking to find research partners, strike collaborations, raise money, buy other companies, or be acquired themselves in the nonstop deal making that surrounded the annual conference. After several sluggish years, life sciences deal making has begun to rebound, with investors and companies increasingly turning to partnerships to share the costs and risks of bringing expensive new therapies to market.

The increasing activity, of course, is good news for Massachusetts and its large life sciences industry. Investments in health care and life sciences accounted for more than half of the $959 million in venture capital funding in Massachusetts during last year’s fourth quarter, according to New York venture capital database CB Insights. Early-stage companies, which have found it especially hard to secure financing in recent years, accounted for 42 percent of the deals.

“It’s like speed dating,’’ said George Scangos, chief executive of Biogen Idec. “Everyone’s more open [to deals] because everyone’s under pressure to bolster their revenue and expand [the new products in] their pipelines.’’


The industry, meanwhile, is moving beyond traditional funding and partnership deals, exploring new collaboration models. For example, Polaris Venture Partners, the Waltham firm investing in Adimab and more than 40 other life sciences companies, last week unveiled an alliance with Janssen Pharmaceuticals, an arm of health care giant Johnson & Johnson of New Brunswick, N.J.

The arrangement will install Janssen physician-scientist Michael J. Elliott as an “entrepreneur in residence’’ jetting between Polaris’s Dogpatch Labs in Cambridge; Palo Alto, Calif.; New York; and Dublin. Dogpatch Labs seek to bring early-stage companies together in a spirit of “open source entrepreneurship’’ to share ideas and expertise in life sciences and high technology.

The Polaris-Janssen collaboration, in turn, will allow Elliott to support research projects at biomedical start-ups, including many in which Polaris and Janssen have not yet invested.

“Clearly pharma is interested in getting closer to the core of innovation - and outside innovation, not just what’s in their own labs,’’ said Terry McGuire, cofounder and general partner at Polaris. “They feel there’s a competitive advantage to this. More and more, the true engine of life sciences innovation is the [small] biotechs.’’

In another deal disclosed last week, French drug maker Sanofi SA, which last year purchased Cambridge’s Genzyme Corp., said it would invest with Boston venture capital firm Third Rock Ventures in Warp Drive Bio, a Cambridge start-up focused on using microbes found in plants, soil, and other natural products in drug development.


“Co-investing with a VC gives you a second opinion,’’ said Sanofi chief executive Christopher A. Viehbacher, who is seeking to make his company more entrepreneurial.

Life sciences executives last week were buzzing about a pair of buyouts inked in the run-up to the J.P. Morgan conference. Bristol-Myers Squibb Co. of New York, said it would spend $2.5 billion to buy Inhibitex Inc., while biotechnology company Gilead Sciences Inc. of Foster City, Calif., agreed to purchase Pharmasset Inc. for $11 billion. Both of the acquired companies are working on next-generation treatments for the hepatitis C virus, setting themselves up as future competitors to Cambridge-based Vertex Pharmaceuticals Inc., which last year brought a hepatitis C drug to market.

The deals signaled that the pace of mergers and acquisitions may be picking up. “The deal between Bristol-Myers and Inhibitex set the tone,’’ said Michael W. Bonney, chief executive of Cubist Pharmaceuticals Inc. of Lexington. “Compared to 2011, there is cautious optimism.’’

Cubist struck its own alliance with Hydra Biosciences Inc. of Cambridge last week to begin early-stage clinical trials of a treatment for acute pain. Biogen Idec has also been expanding its work with partners. Earlier this month, it entered into a collaboration agreement with Isis Pharmaceuticals Inc. to develop and commercialize a drug to treat spinal muscle atrophy. Last fall, it announced another partnership with Portola Pharmaceuticals Inc. to bring treatments for autoimmune disorders to market.

Across the Atlantic, drug maker Sanofi has been scaling back its in-house research and boosting its research alliances, especially with smaller biotechnology partners. Such alliances will soon represent 50 percent of its research programs, up from 30 percent in the recent past, Viehbacher told investors this week. “There’s an opportunity for Sanofi to step in, work with partners, and create a new paradigm in research,’’ he said.


Robert Weisman can be reached at weisman@globe.com.