Targeting ALS, GlaxoSmithKline and Avalon seed another build-to-buy startup

Avalon Ventures Managing Director Jay Lichter

Partners GlaxoSmithKline ($GSK) and Avalon Ventures have seeded a 7th startup in their company-building collaboration, lining up $10 million for a new effort to treat ALS.

The company, Iron Horse Therapeutics, is taking a novel approach to the debilitating disease with technology licensed from Sanford Burnham. Patients with ALS, or amyotrophic lateral sclerosis, suffer a gradual weakening of muscles that eventually proves fatal. But those that have a gene defect that limits production of the protein EphA4 tend to live longer, according to the company, and Iron Horse is at work developing small-molecule therapies that could block EphA4 to lessen the impact of the disease.

Now, thanks to GSK and Avalon, the company is in line for up to $10 million in Series A funding as it works through the earliest stages of development, with R&D help from both partners and the Avalon-run incubator COI Pharmaceuticals.

Like its 6 predecessors, Iron Horse begins on a track that could end with a GSK buyout. Under a partnership formed in 2013, Avalon and GSK co-support startups until they've selected a lead drug candidate, at which point the U.K. pharma giant has an exclusive right to acquire each company. If GSK passes, Avalon hangs on to its ownership and gets to choose whether to press forward.

Iron Horse, which takes its moniker from a nickname for baseball Hall of Famer and ALS sufferer Lou Gehrig, is the latest in a group of biotech upstarts in GSK and Avalon's program. The company joins Sitari Pharma, Silarus Therapeutics, Thyritope Biosciences, Adrenergics, Cadherx Therapeutics and Calporta Therapeutics, each toiling in early-stage R&D with a chance to get bought by GSK.

Pleased with the results of their collaboration, GSK and Avalon have expanded it and sweetened the deal for future inductees. The pair has added another potential $60 million to each new agreement, tied to clinical and regulatory success. The initial terms promised up to $465 million for as many as 10 companies.

And Avalon, which functions as the scouting arm of the partnership, has some promising new projects in its crosshairs, Managing Director Jay Lichter told FierceBiotech. The firm scours academic journals for novel approaches to disease, Lichter said, culling the best ideas and pitching them to GSK. If the drugmaker passes, Avalon often moves forward on its own, he said. But if GSK is intrigued, the pair jointly vets the project before deciding whether to bring it on board.

"The pipeline's very thick right now," Lichter said, adding that GSK and Avalon are closing in on an 8th selection that could come together in the next three or four months. The two have averaged about one investment per quarter since joining forces two years ago, Lichter said, and that's the pace they'd like to keep.

"As long as the inquisitive human researcher is trying to understand problems of biology, there will be opportunities," he said. "... The fodder for the medicines of the future is taking these discoveries from academia and being that translational bridge from 'Eureka! I have a paper in Cell,' to 'I have a clinical candidate.'"

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