equity ownership of some ADDcos with its research partners. Other times, the deal will include revenue sharing structures and milestones. Sometimes it will have both equity and revenue sharing components.
Here’s how Forma’s agreement with CRT works. A consortium consisting of Forma and five principal investigators—including professors at the University of Liverpool and Oxford, among others—will oversee the creation of as many as 10 ADDcos. The group will take a deep dive into what are known as deubiquitinating enzymes, or DUBs. Researchers believe these enzymes play a key role in protein homeostasis, or the ability of cells to properly manufacture or deactivate proteins. When this homeostasis is disturbed, proteins do things they aren’t supposed to do, and this can lead to diseases. Researchers think DUBs could be used as a tool to manipulate protein levels in a cell, to essentially bring cell processes back into balance. Forma and CRT will look into ways they can be utilized to treat cancer. Forma will own the equity of the ADDcos, will provide the research funding, and will make certain unspecified payments to CRT if the ADDcos hit certain milestones.
“What we really like about DUBs is, there [are] a little over 90 of them, they’re divided into various structural classes, and they have very strong specificity,” Tregay says. “This isn’t just a generic block-all-protein-degradation kind of sledgehammer, these are very scalpel-like instruments with the ability to block a particular protein.”
Tregay says more than 50 DUBs have direct links into cancer, and they also could be tied to neurodegenerative and certain rare diseases. Tregay anticipates that some of the drugs created through the CRT partnership will end up being put into the protein homeostasis collaboration it has with Celgene. If that happens, Forma will share some of its Celgene milestone cash with CRT.
If this ADDco initiative sounds familiar, it’s because Forma is far from the first to use an LLC structure to its advantage. Two Atlas Venture-backed drug discovery companies, Nimbus Discovery and RaNa Therapeutics, for example, are using that structure as well. Forma’s twist on the concept is using the LLC structure as a vehicle for research collaborations. This, in turn, gives it more ammunition to not only help other companies discover drugs with its engine, but also to be financially sustainable enough to develop and potentially, one day, sell its own drugs in risky fields of what Tregay refers to as “emerging new target classes,” like protein homeostasis.
Tregay wants to delve deeply into a new field every 12 to 18 months, cycling through such industry and academic partnerships. That’s where the ADDcos can help. Each one gives Forma more opportunities for more partnership revenue, or even potential drug candidates for its pipeline.
Forma is only able to do this, however, because it has raised more than $350 million in non-dilutive cash from its industry partnerships, compared to about $40 million in venture funding.
“It certainly gives us a lot more working capital to be able to go after things like this,” Tregay says. “It gives us a lot more latitude than your traditional biotech, that’s for sure.”
It’s far too early to say if Forma can hit the milestones in its various partnerships and ultimately become the sprawling organization Tregay envisions. But Tregay has a path in mind: while supporting itself through its partnerships and deals from its ADDcos, Forma wants to use emerging fields of biology—like protein homeostasis—and selectively target patient groups with a high unmet medical need, and develop drugs that hit the genetically-defined mutations that those patients have.
By doing so, Forma can run smaller, less-costly trials and reduce the financial risk of failure while giving itself the chance to take a more streamlined path through clinical trials and towards regulatory approval. Forma hopes to eventually hold an IPO so public investors to buy into its plan, but Tregay knows Forma—which expects to move its first program into pre-clinical development next year—has plenty of work to do to first.
“What we’re trying to do is prove that we have a differentiated drug discovery engine, which takes time and has to be built kind of organically,” he says. “Hopefully, we can prove to the marketplace that the value of a differentiated drug discovery engine that has the ability to bring multiple drugs forward and onto the market is very, very differentiated in its value proposition [compared to] a single-product company.”
