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Padlock goes from startup to scooped up in a flash

Bristol-Myers Squibb Co. will pay as much as $600 million for Padlock Therapeutics Inc., a Cambridge biotech company that was founded less than two years ago.

Padlock’s rapid move from startup to sale is remarkable even in an era when big pharmaceutical companies are desperate for new drugs and technology to treat diseases. It also underscores the lucrative payouts available to biotechs and their venture capital backers if their work catches the eye of Big Pharma.

Padlock, which has about 10 employees in Cambridge and San Diego, has been working on about a half dozen early-stage drug candidates to treat rheumatoid arthritis and other autoimmune diseases such as lupus and multiple sclerosis.


Its science, stemming from work at the Scripps Research Institute in San Diego, focuses on ways to inhibit enzymes — known as peptidyl arginine deiminases, or PAD — responsible for driving immune system diseases.

“This is a really important piece of biology that has the potential to fundamentally change the way autoimmune diseases are treated,” Padlock founder and chief executive Michael Gilman said in an interview. “Bristol-Myers is already a player in this field, and I can’t think of another acquirer that would know as much about this” and bring the research forward into clinical testing.

Under the agreement, New York-based Bristol-Myers would make up-front and near-term milestone payments of up to $225 million and pay as much as $375 million more if Padlock’s drug development programs met certain regulatory and development goals. Bristol-Myers is expected to fold Padlock into its existing research operations.

Gilman, who worked closely with investor Atlas Venture to hatch Padlock, is a serial entrepreneur who previously started Stromedix and sold it to Biogen Idec in 2012 in a deal valued at up to $560 million.

Bristol-Myers has about 560 employees in Massachusetts. It operates a large drug manufacturing plant in Devens, which makes its rheumatoid arthritis drug Orencia, and has an office in Waltham.


It is also planning to open a research center in Kendall Square in 2018. The center will “focus on the company’s ongoing discovery efforts in genetically defined diseases, molecular discovery technologies, and discovery platform chemistry in state-of-the-art lab space,” said Ken Dominski, a Bristol-Myers spokesman.

Shares of Bristol-Myers fell 1.1 percent to $52.08 on a down day for the market.

Padlock was founded and incubated at Atlas’s offices at Technology Square in Cambridge, where it was based until January, when it moved to a larger site near Alewife. Other backers include the venture capital arms of health care conglomerate Johnson & Johnson and the German drug maker Merck Serono KGaA and the Anglo-Swiss investment firm Medicxi Ventures.

In a blog post Wednesday morning, Atlas Venture life sciences partner Bruce Booth described the Padlock acquisition as “ a bittersweet end to a great startup story and the start of a promising and likely productive portfolio” for Bristol-Myers.

“We certainly never anticipated exiting our investment within two years, but Padlock’s trajectory and R&D progress has been staggeringly fast and attracted the interest of multiple suitors late last year,” Booth wrote.

Both companies’ board have approved the transaction, which is scheduled to close in the second quarter. Gilman said the parties are discussing the transition, but the plan is for Padlock employees, including himself, to remain with Bristol-Myers.

Robert Weisman can be reached at Follow him on Twitter @GlobeRobW.