Deal Flow

Luc Therapeutics, Novartis ink major preclinical drug development deal

Focus is on new small molecules discovered and developed to serve as a rapid-acting drug treatment for depression, targeting subunits of NMDA receptors

Courtesy of Luc Therapeutics

The newly named Luc Therapeutics, an early stage drug development firm that was begun in Providence, announced that it had signed a deal with Novartis for licensing and development of its new compound to create a fast-acting treatment for depression.

By Richard Asinof
Posted 10/19/15
Luc Therapeutics, the former Providence-based early stage drug discovery firm, announced that it had signed an agreement with Novartis, one of the world’s leading Big Pharma companies, to license and development its small molecule compound with the promise of serving as a fast-acting anti-depression drug.
How do you measure the success in the way that the Slater Technology Fund helped to nurture an early stage drug development firm in Rhode Island? How does that acumen translate into the recommendations now being prepared by the Brookings Institute about the future economic strategy that Rhode Island should pursue? Is there a sweet spot for Rhode Island to pursue in its relationship to the orbit of the Cambridge/Boston ecosystem? Does it point to the need to develop a stronger infrastructure for capital investment here in Rhode Island that complements the talent and technology already here?
In the last few months, there has been significant deal flow in Rhode Island in the biomedical industry sector. IlluminOss hired a new president and CEO, poised to be commercialize its revolutionary technology to repair bone fractures in 2017, with the potential to become the state’s next billion-dollar company. Luc Therapeutics signed a major pre-clinical drug development deal with Novartis. EpiVax is on the verge of new partnerships in the development of its BioBetter tools, utilizing its immuno-informatics technology. Ximedica acquired a prominent West Coast design firm to position itself to capture a greater share of the digital health medtech market. ProThera Biologics appears to be on the verge of a major partnership to advance its technology.
What’s been missing is any kind of informed conversation by Rhode Island’s political leaders about how to measure the enormous potential of the biomedical sector. There appears to be a distinct knowledge gap about the knowledge economy here in Rhode Island.

PROVIDENCE – Two weeks after announcing its name change to Luc Therapeutics and the move of its headquarters to Cambridge, Mass., the early stage drug development firm formerly known as Mnemosyne Pharmaceuticals announced it had reached an exclusive licensing and collaborative agreement with Novartis.

Novartis, the Swiss-based behemoth, is the second largest Big Pharma firm in the world by revenue, having generated about $58 billion in revenue in 2014.

The company’s global research operations, called the Novartis Institutes for BioMedical Research, have their global headquarters in Cambridge, explaining in part the decision by Luc to move from Providence to Cambridge.

The deal, officially announced on Monday, Oct. 19, had been rumored to be in the works for months.

The deal with Novartis is focused on accelerating the discovery and development of Luc’s proprietary compounds for the rapid treatment of depression, focused on what’s known as the subtype selective NMDA receptor NAMs, or negative allosteric modulators.

The alliance with Novartis serves to validate the success we have had in launching the drug discovery venture that Mnemosyne, now Luc Therapeutics, represents, said Richard Horan, senior managing director at Slater Technology Fund, which provided the initial investment to launch the firm in 2010. “It demonstrates our ability to bring together the talent, the science and technology, and the capital, at least through early stage, commensurate with the task of launching a world-class drug discovery venture.”

The company is poised for significant success, according to Horan. “We consider it one of the most promising prospects in our portfolio,” he said.

The science builds upon the company’s founding vision in 2010 to focus on modulating the NMDA receptors, the essential mediator of synaptic plasticity, to help alleviate the most serious psychiatric diseases in patients.

The new collaboration with Novartis, said Vanessa King, the CEO of Luc Therapeutics, demonstrates the depth of the firm’s expertise in the pharmacology of NMDA receptor modulation. “These compounds have the potential to yield therapeutics that are able to improve the lives of patients with depression more profoundly than products that exist in the market today,” King said in a news release. 

Under the terms of the deal, Luc said it had exclusively licensed the intellectual property for the newly developed compounds to Novartis. In turn, Novartis will fund all research and development for the program to move it to the clinic.

Actual details of the financial terms were not disclosed, except to say that they included an upfront payment to Luc, as well as development and sales milestones and royalties.

Making the value visible
In an interview with ConvergenceRI, King described the new compound in development as “a completely novel chemical that the team at Luc was able to discover and characterize enough for Novartis to see the value.”

While the financial details remain confidential, King told ConvergenceRI: “What I can tell you, from an operational perspective, is that this is very much a collaboration between the two organizations. Novartis is a fantastic partner for this.”

In particular, King cited the fact that the neuroscience discovery group, which had been based in Basel, Switzerland, is now based in Cambridge. “Our team is actively working with Novartis to move these molecules to the clinic as one [collaborative] project team, the first time I’ve seen this in my professional career,” she said.

King also praised the science behind the discoveries, explaining that it involved some “tricky medicinal chemistry.”

“Many a drug company and a biotech firm have struggled with [the pharmacology] around modulators,” she explained.

In addition to the work on its lead platform with Novartis, King said that Luc’s scientific team was still at work in the discovery phase of development of other new molecules involved with positive allosteric modulators, or PAMs, with NMDA receptors.

“Expect to hear more news from us in 2016,” King said.

Brief history
The origins of the Mnemosyne began when two scientists from Pfizer in Groton, Conn., including Frank Menniti [who became chief scientific officer], connected with Kollol Pal, [who became CEO], a successful life sciences entrepreneur from Boston, focused on drug development opportunities and NMDA receptor modulation in the brain, what the company’s founders called “the brain’s master switch for learning and memory,” and its role in regulating synaptic plasticity.

Beginning with an initial $250,000 investment from Slater, the company parlayed smart science, shrewd business acumen, and cost-effective research conducted by Contract Research Organizations to raise $11.5 million in Series A financing, including $6 million from Atlas Venture in July of 2013 and continued support from Clal Biotechnology Industries.

In October of 2014, Pal was replaced by King as CEO, who had most recently served as head of Amgen’s East Coast business development and licensing operations, as well as external venture innovation. King had previously directed business development for deCODE genetics, Inc., an Icelandic company that was acquired by Amgen for $415 million in 2012.

The history of Mnemosyne, now Luc Therapeutics, illustrates the potential opportunities and risks of launching a successful life sciences venture in Rhode Island, according to Horan. “It demonstrates that we are capable of creating world-class companies that attract requisite resources to take compelling new ventures to scale,” Horan said.

On the other hand, Horan continued, “it illustrates the paradox, in some cases, that progress in such endeavors can increase the possibility that these ventures will need to relocate out of Rhode Island in order to maximize their chances of success.”  

Beyond the question of whether more robust sources of venture capital here in Rhode Island would increase the pace of economic development in the state's innovation economy, Horan said the story of Luc Therapeutics underscored one of Rhode Island's greatest advantages: its location within a larger life sciences and biomedical ecosystem.

“One of our single greatest advantages in building our innovation economy here in Rhode Island, particularly in life science and biomedical sectors, is our location within the concentration of a life science research enterprise that starts in Boston/Cambridge to the north and extends down through the Northeast Corridor, including major research activities in places such as Pfizer/Groton, Yale/New Haven, and major academic medical centers farther south, Horan said. “it is a regional cluster unequaled anywhere in the world.”

Unconfirmed details of the deal
Earlier this year, an online Israeli business news publication, Globes, published details of the apparent deal between the company that was then called Mnemosyne and Novartis, based upon public reporting requirements for Israeli companies, in this case Clal Biotechnology Industries, one of the firm’s major investors.

According to the Globes story, Novartis would be allegedly paying what is now Luc Therapeutics the following sums: a $6 million advance; then a potential $380 million in royalties if the product passes a number of milestones [including $180 million related to milestones in clinical trials in gaining approval to bring the product to market, and $200 million more for milestones related to sales targets], plus 10 percent royalties on revenues.

King declined any comment about the story and the alleged figures quoted in the Israeli business news story or their accuracy.

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