Shire & Atlas: Introducing Our New Strategic Alliance For Rare, Orphan Diseases

Posted in Boston Cluster, New business models, Portfolio news

Today we announced a new strategic alliance with Shire Pharmaceutical’s to identify new opportunities for early stage venture creation aimed at addressing rare genetic diseases.  This collaboration brings unique expertise from Shire’s Human Genetic Therapies group together with our company creation experience.

Here’s the brief press release:

Atlas Venture and Shire Enter Alliance to Invest in Innovative Early-Stage Rare Disease Therapies

 CAMBRIDGE, MASS, December 15, 2011–Atlas Venture, an early-stage venture capital firm, today announced that it has entered into a multi-year collaboration with Shire Human Genetic Therapies (“Shire”) to explore investment opportunities in early-stage rare disease therapeutics.

Shire and Atlas will work together to identify strategic investments for early stage venture creation around rare genetic diseases. The partnership leverages Shire’s capabilities and knowledge in the research and development of rare diseases with Atlas’ expertise in the formation and growth of early stage companies.  .

“As a leader in rare diseases, this partnership is another way for Shire to ensure that we expand into new disease areas and continue to apply cutting edge technologies in this space,” said Philip J. Vickers, Senior Vice President, Research and Development, Shire. “Working with an organization like Atlas provides us with a new source of external expertise that is complementary to our internal capabilities and has a clear focus on Shire’s goal of bringing innovative therapies to patients suffering from rare diseases worldwide.”

The creative alliance structure provides an opportunity early in the venture process to utilize all of Shires capabilities in rare diseases from research to commercialization, while leveraging the extensive Atlas network and experience in company formation. Under the agreement, professionals from both Shire and Atlas will be dedicated to work closely together to advance the collaboration effort.

“The partnership with Shire is truly synergistic and leverages our individual strengths to create and fund new startups around high potential medical science early in the R&D cycle,” said Dr. Bruce Booth, Atlas Venture partner.  “There is an unmet need for the discovery and development of rare disease therapeutics and we are pleased to partner with a leader in this space.”

There are several aspects of this strategic alliance worth highlighting further:

  • We will be looking at a broad range of orphan and rare diseases that are currently at an early stage of development (e.g., drug discovery through early clinical development); the diseases in focus extend well beyond what is currently in the Shire pipeline
  • Shire’s HGT group will help conduct “wet diligence” under MTAs on new opportunities on behalf of the alliance to help confirm/validate the claims of these early stage programs (when wet diligence is appropriate or feasible).
  • The alliance has dedicated professionals supporting the diligence and structuring of new opportunities, and we expect to create a small portfolio of deals during this multi-year partnership.
  • The possibility for creating option-like structures for these deals is a key part of this alliance, and we anticipate setting them up as part of our initial investment where the structure makes sense.  In these deals, Shire will have the right to acquire and integrate the company/asset into its R&D pipeline at a pre-defined valuation upon reaching an agreed set of milestones.  This secures access to these innovations for Shire, while mitigating the downstream liquidity risk for the team and investors.
  • In addition, Shire will invest capital alongside Atlas in these opportunities, and therefore help reduce the aggregate cost of capital.

A clear win-win alliance structure.

More broadly, this is the third new venture formation initiative we’ve announced recently.  AVDC (“Atlas Venture Development Corporation”) represents our asset-centric framework for engaging Pharma on specific externalization opportunities where a lean, venture-backed development model offers financial, organizational or efficiency advantages.  In April 2011, we announced a Seed Funding Alliance with Monsanto, the world’s largest AgBio company, around the life science tools and technologies space; we’ve already closed on our first investment with Monsanto as a key partner and will be announcing it early in 2012.  And now this structured venture formation alliance in rare diseases with Shire.

We are quite excited about how these unique platforms will enable us to further experiment with the early stage venture model.

Its worth noting that these initiatives are complementary to our primary investment focus on life science venture creation.  The majority of our investment strategy remains focused on creating, sourcing, and funding new startups outside of these initiatives, but its clear these types of efforts are playing an increasingly important role in our portfolio construction.

We’re excited to welcome our new partners at Shire, and look forward to a busy 2012 with them.

 

 

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  • Diana Bartlett

    Congratulations on this collaboration.  Our graduate students have considerable expertise in identifying promising rare disease opportunities.  Check http://www.kgi.edu/news-and-events/feature-stories/2011/new-team-masters-projects-include-emphasis-on-rare-diseases.html

  • http://twitter.com/sciencescanner David Grainger

    Great idea.  The future of biotech investing has to lie in structured platforms like this and AVDC – the old company-building investment model just isn’t cutting it http://www.tcpinnovations.com/drugbaron/?p=180

  • Malcolm Booth

    Yes, good to hear that innovative pharma and VC companies are teaming up to consider innovative finance structures for orphan developers. I wonder how broad the remit of orphan drugs targeted will be. Mostly around oncology or as wide as orthopaedics?

  • LifeSciVC

    Malcolm, Its primarily therapeutics across rare genetic diseases (dystrophies, ataxia’s, enzyme deficiencies, etc…). Thanks for the note

    Bruce L. Booth, D.Phil.

    ATLAS VENTURE | 25 First Street, Suite 303 | Cambridge, MA 02141
    bruce@atlasventure.com | P: +1 (617) 588-2636 | C: +1 (917) 302 8571
    @LifeSciVC | Blog: http://www.lifescivc.com | EA: Ann – agiambertone@atlasventure.com