The economists all say that the recession is over, but you’d hardly know from the creative contortions entrepreneurs must perform to start a biotech company in 2010. The latest sign of the times comes from Resolve Therapeutics, an interesting new startup in Seattle.
Resolve is the latest spinoff from the University of Washington, where it was cooked up in the labs of rheumatologist Keith Elkon and immunologist Jeff Ledbetter. They co-founded this company with CEO Jim Posada, a former dealmaker with Eli Lilly and GlycoFi before that New Hampshire-based company was sold to Merck in 2006 for $400 million. The startup’s vision is to create an effective new drug for lupus, a chronic disease in which the immune system goes haywire and attacks healthy tissue like an invading virus.
The way this company is getting structured says a lot about the cautious, short-term thinking that prevails today in biotech. Ledbetter is a proven scientific entrepreneur, having co-founded Seattle-based Trubion Pharmaceuticals, and having a played vital early role in the development an FDA-approved drug—Bristol-Myers Squibb’s abatacept (Orencia). The opportunity in lupus is still huge, with no new drugs approved in at least four decades, and an estimated 1.5 million to 2 million people in the United States suffering from the illness. Many companies have tried and failed in their quest to tap this huge potential market. Rockville, MD-based Human Genome Sciences (NASDAQ: [[ticker:HGSI]]), along with Roche’s Genentech unit and AstraZeneca’s MedImmune operation, have rekindled hopes of patients and physicians through a series of advances in recent years.
Instead of seeking to raise a mountain of venture capital to build a company to pursue the big idea, Resolve is following the lean and mean “virtual” company model that has become popular by necessity. That’s nothing novel, but what’s more interesting is that Resolve is being financially structured to produce a quick payday for its investors. Knowing that it would take too long and cost too much to follow a traditional path, Resolve’s game plan is to raise $12 million to push a single drug candidate through the first part of mid-stage clinical trials, and then generate liquid returns through a partnership with a Big Pharma company that seeks to finish the long, expensive, and risky slog of drug development. There’s no pretending here that Resolve will go public, and it doesn’t need to be acquired for a fortune someday by a big drugmaker.
“There’s a well thought out plan here,” Posada says. “We’re going to operate with as little capital as possible and get ourselves to a partnership deal as quickly as possible. We can provide returns for our investors in a timely way, and we can provide Big Pharma what it needs in terms of new drug candidates.”
The company hasn’t raised its money yet, although it now has an exclusive license from the UW to develop protein therapeutics against autoimmune diseases, including the biggie—systemic lupus erythematosus. This is based on deep knowledge of the disease and its molecular pathways from Elkon, lots of expertise in protein drug engineering from Ledbetter, and business strategy and dealmaking experience from Posada.
Posada says he got excited about the new idea about six months ago. The UW scientists have already created a fusion protein molecule, made to
