Gilead to buy Nimbus unit for up to $1.2b
Gilead Sciences Inc. said Monday that it will buy Nimbus Apollo Inc., a deal valued at up to $1.2 billion that will bring the nation’s largest biotechnology company another potential treatment for liver diseases.
Nimbus Apollo is one of a half-dozen drug discovery subsidiaries operated by Cambridge-based Nimbus Therapeutics LLC, a seven-year-old holding company backed by venture capital firm Atlas Venture and software maker Schrodinger Inc. The structure gives the privately held parent company flexibility to sell some of the drug programs, find partners for others, and bring others forward itself.
Nimbus Therapeutics, based in the former Polaroid headquarters at 784 Memorial Drive, has about 20 employees, mainly scientists and business veterans, and farms out work from all of its subsidiaries to a network of more than 120 contract researchers.
The furthest along of the Nimbus subsidiaries, Nimbus Apollo is working on a family of compounds based on technology that blocks a disease-causing enzyme known as Acetyl-CoA Carboxylase, or ACC.
Gilead, best known for its highly effective but very costly hepatitis C treatments, was particularly interested in Nimbus Apollo’s lead ACC inhibitor, called ND1-010976, which treats nonalcoholic steatohepatitis, a liver disease affecting millions of Americans in which the ACC enzyme causes fat to accumulate in the liver, leading to inflammation and scarring.
While that disease is the initial target, Gilead also plans to explore testing the drug candidate as a treatment for epatocellular carcinoma, a liver cancer that can stem from hepatitis, said Gilead spokeswoman Amy Flood.
Flood said Gilead will evaluate the experimental Nimbus Apollo drug as a single agent and will explore approaches in which the drug would be combined with other Gilead medicines.
Under the deal, Foster City, Calif.-based Gilead will make an upfront payment of $400 million and additional payments totaling $800 million if Nimbus Apollo’s drugs meet future milestones.
Gilead’s stock rose 12 cents to $94.24.
Gilead will acquire the intellectual property behind the ACC inhibitors in the Nimbus Apollo pipeline and manage clinical trials, but it won’t be acquiring any Nimbus employees. All of the employees work in a separate Nimbus Therapeutics subsidiary called Nimbus Discovery and focus on multiple drug programs using Schrodinger’s quantum mechanics-based software to predict how experimental drugs can bind to targets.
“This deal validates the model that we’re using,” said Nimbus Therapeutics’ chief executive, Don Nicholson. “Today it’s business as usual here. We’ve sold one of the subsidiaries, but the rest are fully active. We can build up our portfolio and do it again.”
The company has been at the center of the national controversy over high drug prices. Massachusetts Attorney General Maura Healey warned in January that Gilead faced possible legal action unless it lowered the price of two popular hepatitis C medicines: Sovaldi, which costs $84,000 for a full 12-week course of treatment, and Harvoni, which costs $94,500.
Gilead representatives met privately with Healey’s staffers last month, and both sides are continuing to discuss the issue.
Nicholson, a Canadian-born scientist who spent most of his career with the drug maker Merck & Co., said Nimbus Therapeutics had considered going public in mid-2016. But the Gilead transaction will give it enough cash to move its other programs forward without an initial public offering or having to raise additional rounds of private financing in the near future, he said.
Bruce Booth, a partner in Atlas Venture’s life sciences group in Cambridge, said the Nimbus Therapeutics structure may be a new model in biopharma investing.
The holding company model “enables the sale of the eggs, not the goose,” Booth wrote in a blog post Monday.
“This transaction is, to our knowledge, the first significant demonstration of a . . . therapeutics platform model working to tax efficiently distribute proceeds from sale of an asset-centric subsidiary (the egg) — without having to sell the entire company (the goose),” Booth wrote.