GlaxoSmithKline, Avalon launch a pair of new build-to-buy biotechs

GlaxoSmithKline ($GSK) and San Diego-based Avalon Ventures have crafted two new biotechs which will explore the therapeutic potential of a pair of new drugs. These companies, dubbed Silarus Therapeutics and Thyritope Biosciences, will each get a $10 million Series A and research support from the venture group and its Big Pharma partner, which will consider whether it wants to snap up the companies once they hit the proof-of-concept stage a few years down the pipeline.

These upstarts are the second and third new ventures set up by Avalon and GSK under a $495 million incubation pact set up in 2013. Using Avalon's extensive contacts in the research community up and down the West Coast, venture chief Jay Lichter is working with GSK's Lon Cardon to identify 10 preclinical programs that have the potential to go all the way.

These two new companies are focused on therapeutics targeting the hormone erythroferrone for the treatment of iron deficiency and iron overload disorder (Silarus) and autoimmune generated antibodies that cause Graves' hyperthyroidism--the primary trigger for hyperthyroidism--and Graves' orbitopathy (Thyritope). Silarus is being built on the IP developed by UCLA's Tomas Ganz and  Elizabeta Nemeth, while Thyritope is emerging from UC Santa Barbara and the lab of Patrick Daugherty, a professor of chemical engineering and biomolecular science and engineering.

"The Avalon group is well connected on the West Coast," says Cardon, senior vice president, alternative discovery and development at GSK. "They know the right people, what's going on scientifically. They identify the top people, drug targets and programs, and we review them almost monthly." The key criterion is whether or not it's a good target, looks like an interesting collaboration and whether it's the kind of project GSK wants to take forward.

Most don't fit the bill, says Cardon, but there's also plenty to pick from. 

"There's a huge universe of ideas," says Lichter about the initiatives in the academic scene. "We never bump into a competitive deal. If it was competitive, I'd probably pull back."

This kind of build-to-buy model seems to work particularly well in the U.S., says Cardon, where academics are more likely to see the appeal of getting involved in a startup than collaborating on a peer-to-peer basis, which works better in Europe. But it's important for academics to understand early on that they have to be realistic about the amount of money that they can get out of it, adds Lichter. It can be significant, but not like winning the lottery. Still, as grants become harder and harder to win and more academics around the country are successful at this, it's a good time to begin talks.

"In the U.S., virtually every major institution has one professor who started a company and had a life changing outcome," says Lichter. "Those people want that opportunity, and we provide part of that."

It doesn't hurt that Cardon and Lichter go back 20 years, adds the venture player, who has one other criteria to mention: Would one of these new projects still be worth backing at Avalon if GSK decides to pass on it, for any reason?

Lichter has built up an R&D staff of 40 in his San Diego facility, with plans to keep hiring as more companies join the stable. In addition to the GSK-paired biotechs, Lichter has his own bets in the group.

Three new biotechs in 18 months is a good pace, say the collaborators, and both expect at least one more startup to jump out before the end of this year. Possibly two. At this pace, it shouldn't take much longer to have all 10 up and running, pointed to proof-of-concept data.

This is one of several build-to-buy models that has been gaining an enormous amount of steam in recent years. Atlas Venture has spawned a string of in-house startups, including some like Spero, a new antibiotics company starting out with a build-to-buy program with Roche ($RHHBY). Versant, meanwhile, has been putting the finishing touches to a new $300 million fund as it works on a slew of build-to-buy efforts in R&D hubs in San Diego, Vancouver and more recently Montreal.

- here's the release

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