Tillman Gerngross has always had a two-step business model in mind for his Lebanon, NH-based drug discovery startup, Adimab. First, lure several big pharmaceutical companies to test out its efficient, yeast-based process for discovering antibodies. Then, wait for them to write a big check to license that technology and bring it in-house, providing big returns for Adimab’s investors in the process.
Today, six years after its inception, Adimab can say that it has now convinced two companies to quit kicking the tires and buy the car.
Adimab is announcing two separate technology transfer and licensing agreements—one with British pharmaceutical giant GlaxoSmithKline (NYSE: [[ticker:GSK]]), and another with Cambridge, MA-based biotech titan Biogen Idec (NASDAQ: [[ticker:BIIB]]). The agreements are significant milestones in Adimab’s development, because they represent the first two times a customer has decided to take the company’s drug discovery technology and use it as the basis to create a pipeline of antibody drugs.
“These are transformative deals,” Gerngross says.
This is because Adimab’s vision of a sustainable, profitable, privately-held biotech is becoming a reality. In the past, Adimab got nibbles from a legion of pharmaceutical companies—among them Merck, Eli Lilly, Roche, Pfizer, Novartis, and Gilead Sciences—that struck small partnerships around one, or even several, biological targets that it wanted Adimab to discover antibodies against. Some of them, such as Merck and Eli Lilly, broadened their relationship with Adimab: In January, for example, Merck got a three-year window to have Adimab scientists identify certain antibodies based on targets it selects, while Eli Lilly was given the right to test the company’s capabilities out in creating bispecific antibodies—which can hit two molecular targets instead of one. All of these deals gave Adimab revenue and the potential for milestone payments down the road, but not on the scale that would create the sustainable company that Gerngross envisioned. This is where the GSK and Biogen deals come in.
GSK will pay Adimab “significant” upfront payments, annual licensing fees, and give it a royalty stream from any antibody it creates that goes on to become a drug sold on the market, according to the announcement. Biogen, meanwhile, will give Adimab an undisclosed one-time signing fee, and make milestone payments tied to certain preclinical and clinical goals for its drug candidates. Adimab will also get royalties and other payments tied to certain sales targets.
While Gerngross wouldn’t reveal the actual size of the up front checks, or the total value of each deal, he notes a few ways in which they will dramatically change Adimab’s financial fortunes. First, he says, Adimab’s total revenue this year will now be between three and five times its $15 million to $20 million in yearly operational expenses—and it will continue to be so for the next five to 10 years. Despite having over 100 percent annual revenue growth for the past five years, Adimab has been “teetering on neutral.” Because of these agreements, this is the first year it will be significantly in the black.
This will allow Adimab to give its investors—which include Google Ventures, Polaris Partners, OrbiMed Advisors, and SV Life Sciences—a full return on the roughly
