Biogen Idec this month announced the first occupant in its new Biogen Idec Innovation Incubator, a program established in early 2007 to stock its pipeline with university-developed drug candidates and drug-discovery tools by nurturing startup companies based on academic research.
The startup firm, Escoublac, is a spinout of Columbia University that is developing treatments for metabolic disease. Under its agreement with Biogen Idec, it will move to the Biogen Idec Innovation Incubator, or BI3, in Cambridge, Mass., where it will receive several million dollars in funding and business support over the next two to three years.
Escoublac is based on the discovery of a link between bone biology and metabolism made by Gerard Karsenty, professor and chair of genetics and development at Columbia University Medical Center. Specifically, Karsenty discovered that the hormone osteocalcin is involved in regulating insulin and fat storage in the body.
Karsenty and colleagues have already published research demonstrating that an increase in osteocalcin activity prevents the development of type 2 diabetes and obesity in mice. Escoublac’s charge is to further explore osteocalcin’s role in humans with the goal of creating new therapies for metabolic disease, especially diabetes.
“The biology of osteocalcin also has applications in other types of metabolic disease, but as of today, I would say the application that is most promising in humans is in type 2 diabetes,” Karsenty told BTW. He added that osteocalcin is a particularly promising therapeutic candidate because it increases insulin secretion and insulin sensitivity, as opposed to other hormones that have been discovered to do only one or the other.
Biogen Idec’s major therapeutic areas are oncology, neurology, immunology, and cardiopulmonary, so the work being done at Escoublac may open new therapeutic avenues for the pharma firm.
“The idea is that the incubator is a chance to explore areas of novel biology, and exciting and important science,” Jeff Behrens, head of business operations for BI3, told BTW. “But you have to recognize that the timeframe for developing these things – because they’re so early-stage – is a decade or more,” he added.
“Our mandate was not to fit exactly in the core therapeutic areas that exist [at Biogen Idec] today, but to look to complement those and create value in this innovative way,” Behrens added. “I think we’re all confident that if this [discovery] proves true, we’ll find a way to make it work in our pipeline, for sure.”
Karsenty will retain his position with Columbia, but serve as a scientific advisor at Escoublac, which will be physically headquartered at the BI3 facilities in Cambridge, Mass. Before taking up residence at BI3, Escoublac negotiated a license agreement with Columbia to commercialize Karsenty’s discovery. Terms of the license agreement have not been disclosed.
According to Behrens, Karsenty will spend a relatively small percentage of his time working on projects at Escoublac.
“The company has its own staff,” Behrens said. “They’re independent employees. We actually have a CSO lined up that will be on staff immediately, and we’re hiring other staff from … both Dr. Karsenty’s and our network. Dr. Karsenty is playing an active role in the company, and advising the company as a consultant, but his primary responsibility is coming up with the next great discovery after osteocalcin.”
Karsenty added that Escoublac also has a senior scientist on staff and that the company plans to hire an undisclosed number of general scientists in the coming year.
A New Investment Model
Both Biogen Idec and Pfizer established incubators in early 2007 to support the development of spinout companies derived from university research or started by entrepreneurial scientists (see BTW 5/7/2007).
The new model is an extension of traditional corporate-sponsored research or corporate investment programs in that the companies provide not only cash, but laboratory space, personnel, market analyses, and administrative support to occupants.
“I think we’re all confident that if this [discovery] proves true, we’ll find a way to make it work in our pipeline, for sure.”
Neither company specifically discloses the level of funding or support given to individual occupants of their incubators. In general, Pfizer said that it seeks to fund candidate companies for two years at approximately $2 million per year, while Biogen Idec plans to invest anywhere from $3 million to $10 million in occupant companies over a two- to three-year time frame.
Karsenty said that the funding allotted by Biogen Idec was comparable to what Escoublac would have received through a traditional venture capital group. However, Karsenty added that the BI3 model was particularly attractive because it “also provides the infrastructure in terms of technical support that is needed. This allows us to start working on the project very fast, within a defined structure, and with people that we will know.”
What’s more, Karsenty said that the pharma incubator model was ideal because it allows him to retain his focus on academic work rather than spend an inordinate amount of time setting up a company.
“Dr. Karsenty and the rest of our academic faculty have a demanding schedule,” Orin Herskowitz, acting executive director and COO of Columbia University Science and Technology Ventures, told BTW. “With the publications and other inventions they’re working on, the time commitment required to set up and manage a company; to find the space; and to manage the financial and administrative considerations are substantial. So something like this has a lot of advantages.”
No Geographic Constraints
In July, Pfizer announced the first occupant in its incubator, a Scripps Research Institute spinout called Fabrus, which is based on the work of Scripps researcher Vaughn Smider. Fabrus is developing antibody libraries and methods for screening them against biological targets in Pfizer’s 11 core disease areas.
Pfizer’s incubator is physically located in La Jolla, Calif., where Scripps and Fabrus are also based. Escoublac, on the other hand, will not feed into the nascent biosciences industry in New York because of its relocation to Cambridge.
Such a scenario is not unusual for Columbia University spinouts because of the relative dearth of inexpensive laboratory and office space in the New York area, according to Herskowitz.
“In general, different universities have different philosophies on this,” Herskowitz said. “Columbia is very much a supporter of New York City, and we are active in local economic development.
“On the other hand, our primary mission is to make sure that the research is translated into useful products,” Herskowitz added. “Geographical constraints that might limit that success aren’t in anybody’s best interest. It is worth noting that we have a very strong preference for locations within the US, but beyond that, our primary intention is to see the technology succeed.”
Karsenty added that Escoublac’s deal with Biogen Idec is structured in such a way that it has a certain amount of time to verify its hypothesis for the role of osteocalcin in human metabolism and to develop a therapy to the point of human clinical trials. If it succeeds, “then nothing prevents us from bringing the company back to New York to some of the buildings that Columbia owns,” Karsenty said.
If Escoublac achieves the goals set forth in the agreement, Biogen Idec will then have first right to license any resulting therapeutics from Escoublac, or to buy the company outright. “It’s Escoublac’s property, and it’s Escoublac’s license,” Behrens said. “It’s developing the drug. If we buy the company, it becomes ours. But until that point, it’s an independent company.
“It’s like any other startup,” Behrens added. “We’re shareholders, as well, but who knows how this will work out? If the intention is to get a successful license or buy the company and put it in our pipeline, then we’ll do that. But it may make more sense to keep it independent for a period of time. The science, in a sense, will tell us the best path forward for the drug development.”
Behrens also said that although Biogen Idec would have preferred its first incubator tenant to be a spinout of a Cambridge-area university, it is more important for BI3 to be “opportunistic” in choosing the companies that will occupy space at the incubator and provide the best possible return on its investment.
“It’s just really important and really cool science, so we wanted to support it,” Behrens said. “It’s the kind of thing where you can define a prototype and all of your specs [for the incubator], but then the real world gives you opportunities, and you want to be smart enough and nimble enough to be able to work with those, and this was a chance to do that.”