Most drug companies are retreating from the business of creating drugs against viruses and, especially, bacteria. But a well-funded startup being announced today is taking the challenge head-on.
The new company, called Vir Biotechnology, will be lead by George Scangos, who recently stepped down as the chief executive of Biogen, the Cambridge, Mass.-based biotech firm. It will be funded with a still-undetermined sum of hundreds of millions of dollars. The Bill & Melinda Gates Foundation, seeking new solutions for scourges like HIV and tuberculosis, will be among its biggest backers.
"Tremendous innovation is needed to control and potentially cure infectious diseases, including those that disproportionately affect the poorest people,” said Bill Gates, the world’s richest man, in a prepared statement. “Vir is a unique partnership that will allow us to leverage novel technologies to address these unmet needs together.”
Vir was founded by Robert Nelsen, a venture capitalist at ARCH Venture Partners. His firm will be committing $150 million to the new company, and Nelsen says that when it is completed the total fundraising would be the biggest ever–meaning it could be north of $500 million. (He spoke before another Nelsen-backed company, cancer test maker Grail, announced last night that it plans to raise $1 billion.)
Nelsen tends to play his passions, and says that this company was based on a simple one: he hates germs. More seriously, he noticed that drug companies were backing off infectious disease just as he thought the science of fighting them was getting new traction. Time for a deal. He recruited Vicki Sato, an immunologist who held top research posts at Biogen and Vertex Pharmaceuticals, to be the company’s chairman. Then, he approached Scangos, who decided this summer he would step down from Biogen because he was tiring of commuting from San Francisco. He hadn’t been planning to take a CEO job, but he says Vir completely captured his imagination.
“There's a huge need here,” Scangos says. “We're talking about hundreds of millions of people who are infected with some of these diseases. If you look at the chronic TB and other infectious diseases we're talking about hundreds of millions of people. There's a huge medical need. There is an incredible opportunity.”
At the core of the company is research being done by Louis J. Picker, a researcher at Oregon Health & Science University. Picker studies the way that T-cells, a component of the immune system, fight off infection. The idea, Sato says, is to try to replicate the kind of immune-system-boosting approaches that are showing success in cancer in fighting off microbes.
One of Picker’s projects is an HIV vaccine that uses cytomegalovirus, a relatively benign virus that stays with people for life. It has shown promise in primates. A similar approach is being explored in TB. This is initially what drew the Gates Foundation’s interest in making an investment in Vir. “It will be years before we get there,” cautions Emilio Emini, the director of the HIV program at the Gates Foundation. But Emini says the foundation was also excited about another prospect: that of spurring more industry interest in fighting germs. “It’s a new company with a focus on infectious disease and inherently that is very interesting and important.”
Vir’s leaders say they intend to invest in other platforms. More than that, they will use the hundreds of millions of dollars the company intends to raise to purchase experimental drugs being developed at big pharmaceutical companies. Some of these will have sales potential the drug giants think will be too small. Others will be getting de-prioritized as companies choose to focus on other areas. The advantage, Scangos says, is that it will be small and entrepreneurial like a biotech, but with a big pharmaceutical company’s ability to make many bets.
Twenty years ago, Scangos founded Exelixis, a biotechnology company focused on cancer. (He is still a director.) Last year, it was the third-best performing biotechnology stock, showing a 164% gain. But its stock looks like a roller-coaster over its history. During 2014, for instance, its share price fell 70%. “In a small biotech with limited resources, things can fail. If you're lucky, one of the early things succeed and you look like a genius,” Scangos says. “If the odds go against you, then you have the opposite issue.” Better, he says, to collect a small group of great scientists and write them a big check. Well, we’ll see. The world’s infectious agents will be hoping Scangos is wrong.
