RNAi developer Arrowhead snags startup Alvos in stock deal

Arrowhead Research has bought Alvos Therapeutics and the small company's peptides that home in on tumor targets. Alvos is getting 315,467 restricted shares in Arrowhead ($ARWR) common stock upfront, with $23.5 million in additional stock awards tied to development and regulatory milestones.

Alvos, previously called Mercator Therapeutics, boasts founders from MD Anderson Cancer Center and veteran biotech insiders Roy Lobb, a former Biogen Idec ($BIIB) scientist and co-founder of Avila Therapeutics (sold to Celgene ($CELG) for $350 million in January) as well as Mark Leuchtenberger, who is chief executive of antibiotics developer Rib-X Pharma, a 2011 Fierce 15 company. Alvos raised $2 million in a seed round in summer 2010 to license homing peptides from MD Anderson that have shown an ability to carry drugs to tumors while limiting side effects on healthy tissues.

Arrowhead, which bought Swiss drug giant Roche's ($RHHBY) RNA-interference (RNAi) assets last year, says Alvos' homing peptides could help the company deliver RNAi treatments into cancer cells and carry a variety of other anti-cancer drugs. One of the major challenges in RNAi drug development has been delivering the gene-silencing therapies to tissues deep in the body, and earlier efforts to achieve this have fallen short. The programs under development at Alvos (which had been operating in the Boston area at the time of its 2010 seed funding) will move to Arrowhead's R&D outpost in Madison, WI, according to the buyer.

Alvos, clearly, never matured as much as Lobb and Leuchtenberger's previous companies, and a vast majority of the payout from Arrowhead will depend on the future success of the biotech's programs. Leuchtenberger hasn't returned a message left on his cell phone this morning to discuss the deal. Arrowhead is planning a conference call to review the transaction at 4:30 pm ET.

In Arrowhead's release, Lobb, the chief scientist at Alvos, said: "We were attracted to Arrowhead as an acquirer because of its ability to accelerate development of the platform through its excellent scientific staff and state-of-the-art facilities."

In 2010, Leuchtenberger told me for an article in Xconomy that a special aspect of the technology the company licensed from MD Anderson was the ability to do organ-specific screening of peptides in humans with cancer, enabling researchers to find peptide-receptor pairs that could help them develop treatments that bring targeted fights to tumors.

- here's Arrowhead's release

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