UPDATED: Fueled by Sanofi, Warp Drive Bio takes off with $125M deal

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Biotech startup Warp Drive Bio has scored $125 million in financing from a syndicate that features the French drug giant Sanofi ($SNY) along with founding backer Third Rock Ventures and the VC firm Greylock Partners. More than just an investor in Warp Drive, Sanofi has an option to acquire the startup if the new company can hit certain goals in developing drugs found in microbial genomes.

With a brand new approach for discovering drugs from nature, Warp Drive aims to search the genomes of microbes for molecules that have the potential to target disease pathways that the have eluded all other attempts to do so. It's the brainchild of Greg Verdine, a chemical biologist at Harvard and venture partner at Third Rock. His fellow founders include Harvard genomics pro George Church and James Wells, who studies protein-to-protein interactions at the University of California, San Francisco.

"This is the type of early-stage, blue sky, innovative, transformative company that a lot of people are saying just isn't getting created anymore," Alexis Borisy, a Third Rock partner and interim CEO of the startup, told FierceBiotech. "But here we are. We have created it."

Many other venture groups have indeed run away from such early-stage efforts, but Sanofi's part as investor and potential buyer of Warp Drive gives Third Rock and Greylock both support for their ambitious plans and a clear path for getting sizable investment returns, Borisy explained. For Sanofi, the deal terms provide the Big Pharma outfit with a shot at gaining valuable new drug candidates without pursuing a risky discovery effort such as this on its own. Sanofi is among a bunch of pharma groups that are boosting their bets on external sources of new products after their internal R&D efforts have come up short.

"The launch of Warp Drive Bio illustrates the strategy in research that Sanofi is pursuing to revitalize innovation, foster external collaborations and better allocate capital," Elias Zerhouni, Sanofi's president of global R&D, said in a statement.

While Sanofi has come aboard as an early collaborator, Borisy said, Warp Drive operates as a truly independent company with the ability to make decisions on its own and seek out partnerships with other drugmakers. Warp Drive's leaders can also decide not to sell the company to Sanofi under the terms of the deal. He declined to say exactly how much Sanofi would pay to buy Warp Drive.

Discovering drugs from microbes has its roots in the early days of the pharmaceutical industry, and it has produced many popular medicines such as the heart pill Lipitor, Borisy said. Yet Warp Drive is assembling a specialized search engine to hunt for molecules encoded in microbial genomes and make dipping into nature's medicine chest far more efficient than past methods, he noted. Fast and cheap DNA sequencing has enabled groups like Warp Drive to assemble troves of genomic data on organisms of interest, Borisy explained, and the discovery work that the company is pursuing wouldn't be possible without advances in sequencing genomes.

Warp Drive's $125 million in committed capital, which the startup is expected to get in separate chunks based on the firm achieving certain goals, is enough to fund the company's main R&D efforts for 5 years, Borisy said. The company, which is based in Cambridge, MA, has been incubating at the offices of Third Rock for the past two years. Its release says that $75 million of the total $125 million deal is equity investment.

In related news: Sanofi has struck a collaboration deal with another Third Rock-backed company, Foundation Medicine. Cambridge, MA-based Foundation announced the deal this morning, saying it plans use its genomic sequencing and analysis services to provide genetic biomarkers and companion diagnostics for Sanofi's experimental cancer drugs. Sanofi is the latest of five drugmakers to form partnerships with the startup.

- here's Warp Drive's release
- see Xconomy's story
- and Dow Jones Newswires' report

Editor's Note: This story was updated with links to other reports on Warp Drive Bio and further details about the financing deal.