Full circle: Startup scores big deal with Pfizer — and QB3 is happy
Read online article by Ron Leuty, Reporter at San Francisco Business Times
Startup Circle Pharma Inc., a UCSF and UC Santa Cruz spinout devising ways to disrupt a wide variety of diseases from inside cells, will work with Pfizer Inc. on two drug programs.
The financial value of the collaboration, as well as the amount of seed funding Circle received this summer from Pfizer and Mission Bay Capital LLC, wasn’t disclosed.
The companies also didn’t specify the two targets that are central to the collaboration.
Still, the deals are huge for Circle — after all, it’s not every day that the world’s largest drug company opts to collaborate with and fund a startup. What’s more, the deal validates the San Francisco company’s coupling of synthetic chemistry with computational design algorithms to select drugs that can slip through cell membranes to attack diseases.
But the deals also are big wins for QB3, also known as the California Institute for Quantitative Biosciences, which aims to commercialize academic work out of the University of California, Berkeley, UCSF and UC Santa Cruz.
Circle’s founders — UCSF School of Pharmacy professor Matt Jacobson and Scott Lokey, a professor of chemistry and biochemistry at UC Santa Cruz — linked up with Pfizer a few years ago through one QB3 program. The company formed with the help of another QB3 program, and it assembled its business plan through yet another QB3-related endeavor.
Even Mission Bay Capital is connected to QB3, managed by QB3 director Regis Kelly and associated director Douglas Crawford, to invest in UC life sciences startups.
“This is an ideal (outcome) — from sponsored research to startup. It’s a cool model,” said Neena Kadaba, director of industry alliances with QB3. “The idea is to pull in startups that are invisible to pharma partners.”
Circle’s work centers on macrocyclic peptides, or strings of amino acids formed into circles. Those molecules potentially could address many diseases that can’t be hit today with conventional small-molecule drugs or large-molecule biologics.
Most therapies require a place on the surface of a cell where a drug can land and attach — a so-called binding site — but macrocyclic peptides can bypass binding sites by wiggling directly into cells. That permeability makes macrocycles attractive for attacking “undruggable” diseases, said Circle Pharma President and CEO David Earp, as well as cancers, fibrosis, inflammation and infection.
The challenge for several companies that have jumped into the field over the last half-dozen years is that they find a macrocycle that works against the disease in theory but ultimately can’t get the macrocycle into the cell.
Circle Pharma, Earp said, understands the physics of the molecules, how they adapt within and outside of the cell and how they interact with proteins. While macrocycles could help carry existing drugs into cells and be more effective once inside, Circle is focusing on developing new drugs — initially for Pfizer, but eventually for other partners and itself — rather than reshaping old ones.
Pfizer (NYSE: PFE) understood Jacobson and Lokey’s computational approach to macrocycles right away, Earp said. It funded the duo’s research through a QB3-Pfizer program that links drug makers and academics.
QB3 also worked with Jacobson and Lokey through another program, called Startup in a Box, to get Circle Pharma incorporated and ready to go. It also helped Jacobson and Lokey, who are QB3 faculty, apply for federal Small Business Innovation Research awards that became manna for biotech startups deserted by venture capital funders during the biotech industry’s roughly five-year financial drought that started in 2007.
Around that time, QB3’s Crawford called Earp, who left Geron Corp. (NASDAQ: GERN) after 13 years as chief legal officer, senior vice president of business development and other positions. Crawford asked if Earp would be interested in advising academics through the complexities of setting up new companies.
One of those companies would be Circle.
“The power of the technology was apparent in theory,” Earp said, “but it’s something different to take an academic project into a company environment with timetables and limited resources — sometimes more limited than the academic environment.”
Yet Circle has met those challenges and now is what Earp calls a “rational drug development company.”
Kadaba of QB3 calls Circle validation of the institute’s work to move potential therapies from lab bench to bedside. But, she added, it also shows that companies need more than an encouraging word and a pat on the head from Big Pharma.
“Startups need more than just, ‘Here’s the target and we’ll come back and be interested in two years,’” she said. “They need, ‘Here’s the data you need to generate and here’s $300,000 to go do it.’ They need pharma partners that are engaged.”