being a “business builder,” not a passive investor. That was a pricey proposition.
“If you’re going to do Alzheimer’s, you’ve got to be in it for the long haul,” Rhodes says. “The premise was, this was a long and important journey, it’s going to be capital intensive—probably even by biotech standards.”
In 2001, Fidelity joined other investors to launch EnVivo Pharmaceuticals. (It was renamed Forum in 2014 after Dunsire came on board.)
Rhodes describes the company as a “very specific, mission oriented business,” a different sort than the other biotechs Fidelity has since invested in through its venture units.
“All the other [Fidelity Biosciences investments] happened within a venture fund, and this sat outside of the fund,” he says. “It wasn’t viewed as a venture investment, in that sense.”
That novelty was reflected in Fidelity’s ownership position; even with the presence of a few other shareholders, Fidelity owned upwards of 95 percent of EnVivo, says Been. That’s a stark contrast to how biotechs are normally built. Even a startup creator like Third Rock Ventures, which likes to amass large Series A rounds to keep a significant stake in its startups, has ended up owning anywhere from about 30 percent to almost 60 percent of many of its portfolio companies by the time they go public.
“It was the only meaningful funding source,” Rhodes said of Fidelity.
Today, with all the advances in genomics, brain imaging, and other technologies, there is so much researchers don’t know about neurodegenerative diseases like Alzheimer’s. In 2001, it was even less. So Fidelity’s plan for EnVivo, according to Rhodes, was a diverse attack. That meant amassing several assets: discovery methods, new mechanisms of action, and drug prospects that might either alter a disease, or just provide symptomatic relief.
The founding technology, for instance, was a discovery platform out of Baylor College of Medicine based on fruit flies. Fidelity then added intellectual property around histone deacetylase (HDAC) inhibitors, and in November 2004, a drug kicked to the curb amidst a restructuring at Bayer—encenicline. The drug is what’s known as an alpha-7 nicotinic agonist, meant to boost the transmissions between synapses in the brain, and in turn, bolster cognitive functions like memory and learning.
With those pieces in place, Been, a former Biogen executive, came aboard in 2005. At the time, there was a “strong emphasis” on the fruit fly platform. Been wanted resources directed elsewhere.
“From my perspective, it was a huge distraction,” he says.
EnVivo spun out the fruit flies into a different company, Vitruvien, that eventually folded. Encenicline became the main focus, and Fidelity became the sole owner. It pumped $65 million into the startup in 2008 and bought out the remaining investors.
This left EnVivo in a unique position for a biotech startup. It didn’t have to do deals or woo outside investors to survive. That doesn’t mean EnVivo didn’t try to form alliances—it did cut one deal, for instance, with Mitsubishi Tanabe Pharma, and Been says he was in talks throughout the years for others that never panned out. But EnVivo, Been adds, aimed to stay private, retain as much value as possible, and commercialize its own drugs despite the prohibitive cost.
“That was a gift,” he says. “Being offered an opportunity to take something all the way to the market is an incredible opportunity that not many people have.”
Despite having the trust and deep pockets of Johnson and Fidelity, EnVivo found itself on the wrong side of a trend in the mid-2000s. Instead of drugs like encenicline to boost cognition, pharma was investing heavily in antibodies and other drugs purporting to alter the course of Alzheimer’s (like bapineuzumab, solaneuzumab, and tramiprosate).
What’s more, drugs from Targacept, Memory Pharmaceuticals, AbbVie, and Novartis, all using an alpha 7 mechanism like encenicline, either failed or were discontinued. But encenicline stayed afloat. With Phase 2a data released in 2009, it started showing signs that it might improve cognition in human patients with either Alzheimer’s or schizophrenia. EnVivo got more encouraging results in Phase 2b trials in 2012 and that “bolstered Ned’s courage, if that still needed to be bolstered,” Been says with a laugh.
It’s worth noting how unusual
