Drug discovery startup Predix Pharmaceuticals didn’t have to look far to raise additional money to support its goal of moving its first compound into clinical trials by the end of the year. The company shared a key investor with Physiome Sciences, which had been rethinking its business model since the departure of CEO Jeremy Levin in April. Seeing an opportunity to advance Physiome’s core technology into drug discovery while also bolstering Predix’s coffers, New York-based OrbiMed Advisors helped steer the companies toward a merger that closed on Aug. 12.
Technically, Physiome acquired Predix for 30 percent of the combined equity of the two privately held firms, but very little of Physiome survives post-merger. The combined company, known as Predix Pharmaceuticals, will be based in Predix’s current headquarters in Woburn, Mass., with computational development offices in Ramat Gan, Israel. Physiome’s Princeton, NJ, offices will close, and only six of the dozen or so remaining Physiome employees will join Predix in Woburn.
The integration of the two firms is expected to wrap up within a month, according to Predix officials.
Predix plans to use Physiome’s ion channel modeling technology for its own drug discovery efforts, but the fate of Physiome’s remaining intellectual property has not yet been disclosed. “We’re looking for ways to monetize non-core assets,” said Jonathan Silverstein, an associate at OrbiMed Advisors and board member of the combined company.
From Models to Drugs
The merger will give Predix exclusive access to Physiome’s modeling technology, but it won’t be Predix’s first experience with computer-based simulation. Founded in 2000 under the name of BioInformation Technologies, Predix relies on a computational method developed at Tel Aviv University to derive 3D models of G-protein coupled receptors. So far, the company has obtained 3D structures for around 50 GPCRs covering eight different families using its technology, and has applied a proprietary in silico screening technique to identify drug candidates for two targets.
In 2002, the company changed its name to Predix Pharmaceuticals “in order to reflect its move into rational drug discovery, preclinical, and early clinical development,” according to company literature. Predix is now on track to bring its first compound, which targets the 5-HT1A serotonin receptor, into Phase I trials by the end of the year.
The financial terms of the merger with Physiome were not disclosed, but the arrangement “brings us enough cash to run through the end of 2004 and to bring one or two drugs through Phase I,” Michael Kauffman, CEO of Predix, told BioInform. The post-merger goal, according to Silverstein, “is to put three drugs in the clinic prior to raising any more capital.”
The deal wasn’t only about the cash, however. Recently, Predix had taken steps to expand its focus beyond GPCRs into ion channels. The company had already built a structural model of the HERG ion channel, but was seeking additional expertise, according to Kauffman. “We looked at a bunch of technologies, and Physiome seemed to be one of the leading — if not the leading — computational technology for assessing drug effects on ion channels,” he said.
Kauffman said that Predix plans to combine Physiome’s function-based computational models of ion channels with its own structural models to create new ion channel-based anti-arrhythmia drugs. Within the next year and a half, Predix plans to have at least two ion channel discovery programs and three GPCR discovery programs underway, Kauffman said.
Despite the potential of its technology, Physiome’s service-based model ultimately did not offer the long-term value its investors were seeking. “In the end Physiome’s business model was not sustainable,” Silverstein said. “I think the reason Physiome shareholders were interested in merging with Predix is that Predix is using its information to discover and develop drugs as opposed to trying to sell information, which is what Physiome’s model was.”
According to Kauffman, the merger of the two companies will benefit both firms: “What Physiome saw in us was a way to take some of their technology and convert it to drug discovery, and a vehicle that would allow them thereby to create real value with the remaining dollars that were in the company. What we saw with them was ion channel expertise, which we were looking for, and, frankly, cash.”