Where are all the Massachusetts cancer drug companies going?
A series of buyouts and setbacks this month — including a $5.2 billion takeover of Cambridge’s Ariad Pharmaceuticals Inc. — has dimmed hopes for an emerging cluster of independent biotechs developing and marketing cancer treatments locally.
Ariad’s sale to Takeda Pharmaceuticals Inc. gave the Japanese company an approved blood cancer drug and a promising lung cancer drug candidate that is being reviewed by regulators. It followed an agreement by another Cambridge company, Merrimack Pharmaceuticals Inc., to sell its approved treatment for pancreatic cancer to Ipsen SA of France for $575 million.
“There’s an enormous amount of oncology expertise here, and a large concentration of cancer research grants,” said biopharma consultant Jonathan Gertler, cofounder and chief executive of Back Bay Life Science Advisors in Boston. “[But] ultimately everybody is for sale. The majority of small biotech companies, if successful, will eventually be acquired.”
Ariad and Merrimack weren’t the only companies spinning off cancer drugs. Boston’s Vertex Pharmaceuticals Inc., one of the state’s largest standalone biotechs, licensed its entire pipeline of four experimental cancer drugs to German drug maker Merck KGaA.
Merck, like Takeda and Ipsen, has research and commercial operations in Massachusetts, doing business here under its US name EMD Serono. All three companies are making a push into a cancer drug market dominated by Big Pharma stalwarts such as Roche AG, Novartis AG, Bristol-Myers Squibb Co., and AstraZeneca PLC. But the ultimate decisions on drug programs for those companies are made outside Massachusetts, often overseas.
By cultivating a homegrown cluster of cancer drug companies, some believe, Massachusetts could more easily capitalize on research breakthroughs made at local academic labs, build a tier of top executives with the autonomy and ability to make moves quickly, and cement a leadership position in the field as promising medicines that target specific cancer mutations begin to emerge.
A broader collection of standalone cancer drug makers is key for the state’s biotech sector’s continued growth, just as cancer drug companies like Genentech Inc. have long fueled the industry in California, said David Schenkein, a Genentech veteran who is now chief executive of Agios Pharmaceuticals Inc. in Cambridge, which is trying to treat tumors and rare genetic diseases by fixing metabolic irregularities that might cause the conditions.
“It’s critically important to the long-term health of the industry that companies like ours — with multiple investigational medicines heading for the market — grow and thrive,” Schenkein said. “Smaller companies are much more likely to take science risks and challenge dogmas than the larger companies. Our goal from the beginning is to be a long-term independent company with multiple products helping patients. We want to be another Genentech.”
In some cases, the recent deals are simply the price of success. Turning away attractive buyout offers isn’t easy, particularly at public companies with investors eager for big payouts, but many top executives at smaller cancer drug developers say they’d prefer to stay independent.
Hugh O’Dowd, recruited from Novartis last year to be chief executive of Neon Therapeutics Inc. in Cambridge, said he was drawn by the chance to develop custom-tailored cancer vaccines and build a sustainable company. The idea, he said, is for Neon to develop and market its own drugs.
At the same time, O’Dowd said, smaller companies face formidable obstacles in their quest to remain unattached. One is the ability to build their own sales forces outside the large markets in the United States and Europe, he said. Pharmaceutical giants, by contrast, have far-flung commercial businesses across Asia and the developing world, and can easily fold new medicines acquired from small companies into those existing sales channels.
For startups and established companies alike, a major draw for the Boston area are research hospitals like the Dana-Farber Cancer Institute, where scientists experiment and doctors run clinical trials with the latest therapies.
More than a dozen startups and early stage biotechs have sprung up in Massachusetts seeking to commercialize a range of approaches to cancer treatments, from targeted gene therapies to drugs that stimulate the immune system to fight tumors.
Among the drug developers, most initially backed by venture capital, are Agios, Bluebird Bio Inc., Blueprint Medicines Corp., Constellation Pharmaceuticals Inc., Epizyme Inc., Jounce Therapeutics Inc., Mersana Therapeutics Inc., Neon, Replimune Inc., Surface Oncology Inc., Syros Pharmaceuticals Inc., Tesaro Inc., and X4 Pharmaceuticals Inc.
But this month’s transactions call into question how quickly this pack of independent cancer drug developers can transform themselves into commercial companies.
Some research setbacks have added to the uncertainty. Merrimack continues as a research company, but last month it halted a clinical trial of a breast cancer drug when an independent panel found the treatment probably wouldn’t work better than those already available.
And earlier this month, US regulators delayed ruling on a new intravenous version of Tesaro’s treatment for chemotherapy-related nausea until the Waltham company provides more information about a pair of its manufacturing subcontractors. Food and Drug Administration officials have granted priority review to another Tesaro drug, which treats ovarian cancer.
Some executives say the critical task for drug makers seeking to keep their independence — and the juncture at which many stumble — is winning approval of their second drug.
“History says it’s hard to have an enduring company if you just have one product on the market,” said Nancy Simonian, chief executive of Cambridge-based Syros, which is developing drugs that regulate cancer-causing genes. “Getting product two and product three on the market is very important. You want to be able to invest money into your research and development engine to keep the innovation going.”
Robert Weisman can be reached at robert.weisman@globe.com. Follow him on Twitter @GlobeRobW.