Shire, Atlas Venture team up to mine for rare disease gold

Dublin-based Shire's ($SHPGY) Human Genetic Therapies unit and venture capitalists from Atlas Venture have formed a multiyear alliance to hunt for new investments in the ripe field of treating rare diseases, Cambridge, MA-based Atlas revealed Thursday morning.

For their part in the collaboration, Atlas' partners plan to use their years of experience in starting new biotech companies. Shire HGT's scientists, who have a track record of developing rare disease drugs such as the Hunter syndrome med Elaprase, will work with Atlas' partners to evaluate investments and carry out wet lab experiments as part of that process, according to Bruce Booth, a partner at Atlas.

Shire HGT, headquartered in Lexington, MA, and Atlas plan to pool capital to back new rare disease drug developers, and Booth said  the potential exists for Shire to gain option-like terms in the investments that would enable the drugmaker to buy a startup for pre-determined sums and roll the new group's drugs into its own rare disease R&D pipeline. "This secures access to these innovations for Shire, while mitigating the downstream liquidity risk for the team and investors," Booth wrote in an email to FierceBiotech.

The deal comes as drugmakers increase their bets on early-stage biotech startups, due to traditional venture capital firms dropping out of the biotech game because of the financial challenges of supporting capital-intensive drug development. Shire HGT, unlike Pfizer ($PFE), Novartis ($NVS), and GlaxoSmithKline ($GSK), doesn't have a dedicated venture group, but now it can tap some of the expertise in this area with Atlas, which has a similar collaboration with agricultural biotech giant Monsanto ($MON).

"As a leader in rare diseases, this partnership is another way for Shire to ensure that we expand into new disease areas and continue to apply cutting edge technologies in this space," said Philip Vickers, senior VP of R&D at Shire, in a statement. "Working with an organization like Atlas provides us with a new source of external expertise that is complementary to our internal capabilities and has a clear focus on Shire's goal of bringing innovative therapies to patients suffering from rare diseases worldwide."

There's a glut of opportunities to create new rare disease medicines. About 25 million Americans are estimated to suffer from inherited diseases, and less than half of the more than 6,000 rare diseases have a known genetic cause, according to the NIH. Also, companies like Genzyme and Shire HGT have been able to charge relatively huge sums of $200,000 and up for their rare-disease drugs. And the FDA extends the market exclusivity of rare or orphan disease drugs as an incentive to companies to develop such treatments.

- here's Altas' release
- check out Booth's blog post