August 24, 2010

Xconomy

Five Prime Therapeutics, Gliding Like a Submarine, Quietly Takes Aim At Cancer

Five Prime Therapeutics is one of those companies built on the old school biotech business model. Take a cutting-edge scientific concept, mix in top scientists and big name venture backers, and see what you get 10 years later.

Now it’s been eight years, and the company is moving toward the point in clinical trials where everyone will soon see if it’s going to deliver a hit or not.

For those new to the story, Five Prime was founded in 2002 by one of the Bay Area’s big scientific names—Lewis “Rusty” Williams. He was the former chief scientific officer at Chiron, a co-founder of COR Therapeutics, a UC San Francisco scientist, and an investigator for the exclusive Howard Hughes Medical Institute. Williams pursued the bold notion that what drug developers needed was not just a good hypothesis around a single protein drug that might work against a single target, but rather a comprehensive library of all the secreted proteins in the body and their receptors on cells, to serve as the basis for screening lots of new drug candidates.

This notion attracted big name investors early on, like Kleiner Perkins Caufield & Byers, Versant Ventures, and TPG. Five Prime has gone on since then to attract partnership dollars from the likes of Pfizer, Johnson & Johnson, and GlaxoSmithKline. The operation has grown to 115 employees at San Francisco’s Mission Bay biotech cluster, across the street from the UCSF campus. I got an update a couple weeks ago when I stopped by to visit CEO Julia Gregory and Aron Knickerbocker, the company’s vice president of business development.

“This is a biotech CEO’s dream,” Gregory says.

The latest bit of news from Five Prime came in early August, when it secured $15 million in an upfront fee from Glaxo, plus $124 million in potential milestone payments, to screen various combinations of biological targets and drug candidates for skeletal muscle disorders. Getting that deal means that more than $200 million has gone into the company in its eight-year history, Gregory says.

While Five Prime isn’t yet running in the black because of its partnerships, they have been productive enough to allow the company to avoid raising any new venture capital since 2005. Given what has happened to startup valuations in the last few years, that’s certainly part of what made Five Prime appealing to Gregory, who left her position as chief financial officer of The Woodlands, TX-based Lexicon Pharmaceuticals (NASDAQ: LXRX) to join the San Francisco startup as CEO in June 2009. This was the “dream job” she was looking for—world-class science, committed financial backers.

That said, investors at some point in a biotech company’s life will start valuing the company based on the product candidates it has in the pipeline, not on the science. The company has a library of 4,500 secreted proteins, and at some point at least one of them has to make it into late-stage clinical trials that can generate a valuation in the billions. That’s the transition period Five Prime is entering, and it’s what I most wanted to ask Gregory and Knickerbocker about.

“We want our products to be first in class, and best in class. Not just first, but best,” Gregory says.

OK, so what does the company have now? It’s building a pipeline of drug candidates for cancer, immunologic disorders, and diabetes. “Three little areas,” Gregory joked.

The lead drug is called FP-1039. It’s a genetically engineered protein drug made to specifically bind with, and inhibit, proteins from the family known as Fibroblast Growth Factors (FGF). These proteins are thought to play a role in the growth of tumors, and the formation of blood vessels that tumors use to grow and thrive. While multi-billion dollar biotech franchises have been built on inhibiting other protein targets that perform functions like this—Genentech’s bevacizumab (Avastin) against VEGF, for one—no one has developed a FDA-approved cancer drug against FGF. Five Prime, which owns 100 percent of the rights to this molecule, believes it is has the only protein drug against this class of target in the clinic, Knickerbocker says.

“We are actively partnering 1039 now, and it has garnered significant interest,” he says.

Data is still preliminary on whether this drug has a real future as a cancer drug. The company is almost finished with a Phase I clinical trial, in which it is testing an escalating series of doses to assess safety. Five Prime is still keeping its options open, testing the molecule against a variety of solid tumors, including those from the prostate, lungs, uterus, kidney, brain, and liver. But interestingly, the company is looking for biomarkers in the very early days of development, to find patients who have aberrations in FGF pathway signaling, who might be more likely to respond to the Five Prime drug. If that hypothesis pans out, then FP-1039 could be following the template of another drug that is built on a companion diagnostic test—Genentech’s trastuzumab (Herceptin) for women with forms of breast cancer that overexpress the HER2 growth protein.

“We think biomarkers will play an important role in development of this drug in Phase II,” Gregory says.

Other companies have developed antibody drugs against the same target as Five Prime, the FGF receptor 1, but quit developing them after they saw too much toxicity—particularly a sudden weight loss in animals. The reason for this effect with antibodies isn’t fully understood, Knickerbocker says. Conventional small molecule compounds have been made against the FGF receptors, but they tend not to be as selective for the target, and cause toxicities. But with a genetically engineered protein, Five Prime hasn’t seen that sort of off-target toxicity in its first study, he says.

Part of what makes the FGF protein so interesting, other than the scarcity of drugs like it, is that it might be part of a combination drug strategy against cancer. That’s because patients might respond for a while to an existing drug targeted against a protein like VEGF, but the cancer eventually finds a way to spread anyway through other growth mechanisms. So as long as the Five Prime drug has a clean safety profile, or doesn’t exacerbate any side effects from the other drugs, it could be part of a multiple targeted drug approach. “The greatest potential is in combination with chemotherapy or other targeted therapies,” Knickerbocker says.

Of course, with a scientific engine that has produced 4,500 other secreted proteins in a library, Five Prime has other drug candidates of its own, and others it is developing with partners, marching their way on the long slog toward clinical trials. If any of them show promise, or show promise and then flame out, they can be stories for another day. For now, Five Prime is trying to show it can mature from a pure science platform into a real drug developer based on a scientific platform.

Once one or two of its drugs starts amassing some solid evidence from clinical trials, then things could get a lot more interesting.

“A platform strategy in biologics is highly competitive. It’s also becoming scarce. Most major biologic companies have been acquired,” Gregory says. “With a protein library like this that no one else has, we’re putting ourselves into a position of very strong competition.” To use a colorful analogy, she put it this way: “We’re like a shiny submarine, right under the surface. All the Big Pharma companies can see it coming.”