Axial partners with great founders and inventors. We invest in early-stage life sciences companies such as Appia Bio, Seranova Bio, Delix Therapeutics, Simcha Therapeutics, among others often when they are no more than an idea. We are fanatical about helping the rare inventor who is compelled to build their own enduring business. If you or someone you know has a great idea or company in life sciences, Axial would be excited to get to know you and possibly invest in your vision and company . We are excited to be in business with you - email us at info@axialvc.com
Third Rock Ventures is one of the pioneers for the VC-operator model that has dominated biotechnology over the last decade. Founded and led by Mark Levin, one could argue Third Rock is “Mark Levin Institutionalized.” On a side note, I met Mark in college and he hands down has the best shirts and shoes, and also the messiest desk, of anyone in biotech. Agios Pharmaceuticals, founded in 2007, was a very significant investment for Third Rock early on in the firm’s existence. Agios was founded by 3 great inventors, Lewis Cantley, Craig Thompson, and Tak Mak and initially led by David Schenkein (after Third Rock invested). In 2008, Third Rock led Agios’ $33M Series A alongside ARCH and Flagship. The company was set up to drug cancer metabolism and grew on the tailwinds of a massive scientific discovery by the company’s founders a few years later. This case study works to reverse engineer the investment decision. Mark Levin was the founder of Millennium Pharmaceuticals and a lot of Third Rock’s early success was executing an “aircraft carrier” investing model. Seeing what Millennium was trying to be in the 1990s, Agios among others were actually achieving a lot of the vision in the 2010s. Agios ended up with several approved drugs and also serves as a case study for one of the best drug development partnerships ever.
Left to right: Cantley, Thompson, Mak
Key reasons Third Rock invested in Agios:
Millennium used an aircraft carrier investment model around Millennium to see that Agios could execute a more efficient version of the business model around new biology in cancer metabolism. This set up Agios to garner a lucrative partnership with Celgene and get an approved drug within ~9 years.
In terms of the science, Agios took a diverse approach early on then honed in one IDHs to get a first mover advantage.
For the business model, Agios’ ability to get global rights on Tibsovo back from Celgene and the first pick on partnerships set them up to efficiently get a wholly-owned, approved asset. An important lesson is that for any partnership, it is important for the upstart to get the first pick on asset exclusivity. This is an evolution of the Millennium model that scaled its platform through narrow deals. Agios adds another layer by setting the requirement to get first pick in deals to maximize the odds of fully owning an approved drug.
Agios was started with the premise of drugging aberrant metabolism of the cancer cell. The company was originally formed from discoveries in the Cantley Lab, which discovered metabolic enzymes that drove several cancers. At the start, Agios pursued a wide range of programs drugging cancer metabolism through several mechanisms: glycolysis, fatty acid metabolism (FAM), autophagy, among others. Within a few years after founding, Agios pivoted its focus to isocitrate dehydrogenase (IDH) led by Michael Su who pushed forward the initial drug discovery and development programs. This new biology was published in 2010 and moved Agios to center the company’s pipeline around the breakthrough discovery for the role of IDH1/2 in cancer:
IDH1/2 are enzymes involved in metabolism and were found to have specific mutations in a wide range of cancers. This discovery, along with the courage to quickly pivot, provided Agios an advantage to develop first-in-class medicine for mutant IDH enzymes well before others. This discovery helped Agios close an iconic deal with Celgene the same year as the publications and led to 2 drug approvals: Idhifa (partnered with Celgene) targeting IDH2 for AML and Tibsovo (internally held by Agios) targeting IDH1 for AML.
At the Series A, Agios was funded based on the potential for the company to develop first-in-class medicines at the nexus of oncology and metabolism:
Kevin Starr, Co-Founder of Third Rock Ventures and the first CEO of Agios before David Schenkein got on board: “In biology, it is truly a rare and unique instance when two major fields of research converge to create a completely new understanding of a deadly disease, offering a unprecedented value opportunity and the potential to create a novel class of drugs. We are very excited to have three outstanding founders who have an unparalleled knowledge base in this new field of biology that holds great promise for making a difference in cancer patient’s lives.”
Cantley: “While I have spent a significant part of my career studying signaling cascades in cancer, this newly discovered intersection of cancer and metabolism represents a new, untapped Achilles’ Heel of cancer cells that can block nutrients, thus effectively starving them of the fuel they need to grow and survive.”
Thompson: “What’s really exciting is that it is now becoming more clear that most oncogenes and tumor suppressor genes have evolved to regulate cancer metabolism, which is an opportunity to translate a century of cancer and metabolic science into a future of powerful cancer therapies.”
Mak: “We have long known that the survival functions and mechanisms of cancer cells overlap with other critical cellular functions, such as those of the immune system – leading to immune therapies such as cancer vaccines – but this new field linking metabolism to the growth and survival of cancer, has demonstrated potential to target and treat cancer in a completely new and fundamental way.”
Third Rock executed on an aircraft carrier model of investing. Thinking through what Millennium enabled led the firm to fund Agios among others. Sequoia Capital has used this strategy very well throughout its history too. For example, their investment in Apple led Sequoia to invest in the ecosystem around the company from startups like Tandon and Priam to Dyson and Printronix. Similarly, Third Rock’s founders had built up Millennium and invested in the ecosystem around it from Agios and MyoKardia to Foundation and a lot more. So the approach of making investments around iconic companies is centered around asking what does the company enable? Often they create new markets and/or problems to solve. They are also fountains of talent that build and lead new businesses. So the key thing is to intimately study the world’s great companies and truly understand why they were successful and where they could have improved. This is probably the easiest way to generate new startup ideas. New companies and problems to solve can be uncovered by asking what AbCellera enables? What does 10X Genomics enable? Guardant Health? Twist Bioscience?
Agios built a platform at the convergence of cancer metabolism and genomics. This was partly inspired by Millennium. Agios actually struck a partnership with Foundation Medicine in 2013 to use genomic profiling to identify patients more likely to respond to IDH1/2 inhibitors. From Agios’ S-1, one of the company’s core capabilities was “mining of genomic data emerging from the public cancer genome sequencing efforts” and using their “state of the art genomics and bioinformatics capabilities to identify metabolic enzymes that are mutated or amplified in tumors.”
So Agios played its part to achieve at least part of Millennium’s vision to use genomics to transform drug development: “Agios is focused on discovering and developing novel investigational medicines to treat genetically defined diseases through scientific leadership in the field of cellular metabolism. All Agios programs focus on genetically defined patient populations, leveraging our knowledge of metabolism, biology and genomics.” Agios built out a platform merging genomics, proteomics, and metabolomics that set them up to make several breakthroughs in cancer metabolism. The platform allowed high-throughput metabolomic profiling to find enzymes involved in tumor growth and combined genomics to find specific mutations in these proteins with structural biology to find new drug targets.
In 2008, the company conducted a proteomic screen using SILAC and LC-MS for phosphotyrosine binding proteins in a cancer cell line. This work led to the Cantley Lab publishing a seminal paper linking PKM2, an enzyme involved in metabolism, and cancer cell growth. Then in 2009, led by Michael Su an incredible drug discoverer, the company used its platform to discover an entire new biology around isocitrate dehydrogenases (IDH) and cancer. The Nature paper established that IDH1 has oncogenic activity. Across 3 mutations in arginine 132 of IDH1, the variants gain the ability to reduce α-ketoglutarate to R(−)-2-hydroxyglutarate leading to ~100x higher concentrations of R(−)-2-hydroxyglutarate in brain cancer cell lines. This mechanism probably played an important role in Agios’ success in the clinic - inhibiting IDH indirectly alters cancer metabolism whereas contemporaries of Agios such as Calithera Biosciences who targeted cancer metabolism directly had toxicity problems or low efficacy. And combined with the observation that over 70% of gliomas/glioblastomas and 20% of AML patients have mutant IDH1s, this research made a compelling case for IDH1 as a drug cancer in oncology. This massive scientific breakthrough set up Agios to build a unique business model and get several drugs approved years later.
The same year in 2009, David Schenkein, who was an SVP at Millennium, came on board as CEO. Along with Third Rock, he brought his network and know-how from Millennium to transform the basic science within Agios into a leading drug development platform. A year later in 2010, Agios entered into a transformative and iconic partnership with Celgene to develop new therapeutics targeting cancer metabolism. Agios continued to publish breakthrough cancer metabolism research and moved into and through clinical development at a furious pace. In 2012, the company discovered inhibitors for mutant IDH1, validating them in vivo. Actually, both of Agios’ two approved drugs, Idhifa and Tibsovo, came from the first 3 screening runs and were then converted from hits into drugs led by Janeta Popovici-Muller. Then in 2013, Agios started their first clinical trial testing enasidenib (AG-221) in patients with advanced hematologic malignancies with an IDH2 mutant. This set up the company to go public in 2013 (S-1). From a fundamental discovery in 2009 to starting a clinical trial in 2013, Agios is a case study on how to transform science into a drug and validate a platform.
In 2010, Agios struck up a partnership with Celgene on the tailwind of the former’s discovery of IDH1’s role in cancer. This is one of the most iconic deals in biotechnology ever. Agios used a new area of biology to design a deal with Celgene that favored the smaller company and picked the right partner who at the time was playing a pivotal role in the cancer drug development ecosystem. A lot of business development in biotech is equal parts world-class science and timing the market. In the late 2000s and early 2010s, Celgene was one of the most active partners in oncology:
Celgene’s partnership with PTC Therapeutics starting in 2007 - https://www.fiercebiotech.com/biotech/ptc-therapeutics-announces-celgene-exercised-option-to-drug-discovery-collaboration
Acceleron starting in 2008 - https://xconomy.com/boston/2011/08/03/acceleron-gets-25-million-in-partnership-deal-with-celgene/
GlobalImmune in 2009 - https://www.globenewswire.com/en/news-release/2009/05/15/1072904/0/en/GlobeImmune-and-Celgene-Corporation-Announce-Strategic-Global-Oncology-Alliance.html
Agios in 2010 - https://investor.agios.com/news-releases/news-release-details/celgene-corporation-and-agios-pharmaceuticals-announce-global
Quanticel Pharmaceuticals in 2011 - https://www.prnewswire.com/news-releases/quanticel-pharmaceuticals-enters-into-strategic-cancer-drug-discovery-collaboration-with-celgene-corporation-133225873.html
Epizyme in 2012 - https://www.fiercebiotech.com/biotech/celgene-recommits-to-epizyme-adding-620m-cancer-drug-bonuses
VentiRx Pharmaceuticals in 2012 - https://www.prnewswire.com/news-releases/ventirx-pharmaceuticals-announces-exclusive-strategic-collaboration-for-development-of-novel-tlr8-agonist-vtx-2337-with-celgene-corporation-172446961.html
Concert Pharmaceuticals in 2013 - https://www.fiercebiotech.com/biotech/celgene-turns-to-concert-for-300m-deuterium-tweaking-cancer-collaboration
Bluebird Bio in 2013 - https://www.genengnews.com/topics/translational-medicine/bluebird-rides-in-celgene-car-t-cells-program/?kwrd=Baylor%20College%20of%20Medicine
The 2010 deal between Agios and Celgene was structured where Agios received an ~$120M upfront payment and a little over $8M in an equity investment from Celgene. From Kevin Starr: “From a size standpoint, this is the largest partnership we have among any of our portfolio companies by a wide margin.” Celgene received an exclusivity period until April 2014 with an option to extend this another 2 years on drugs coming out of Agios’ platform with Agios getting royalties and development milestones for these products in the US. In the 2010 deal, Agios “retained the option for exclusive rights to develop and commercialize AG-120 (what would become Tibsovo) in the United States.” The partnership was expanded in 2016:
Rob Hershberg, CSO of Celgene: “This emerging discipline of metabolic immuno-oncology has great potential to provide novel insights and targets for cancer immunotherapy in solid and hematologic malignancies.”
David Schenkein: “This strategic alliance will allow Agios to quickly expand our existing research platform into a third core area while leveraging Celgene’s capabilities and broad portfolio of immuno-oncology assets.”
Celgene paided Agios an $200M upfront payment with Agios getting first pick on all 50/50 programs. In this extension, Celgene gave Agios global rights to AG-120 for access to Agio’s platform in the then emerging field of immuno-oncology. This was a massive break for Agios. The overall partnership was mostly Celgene funding the development of Agios’ pipeline. The gift of AG-120 gave Agios an efficient path to get a wholly-owned, FDA-approved drug. Throughout this entire process, John Evans played a pivotal role in these partnerships.
Agios built a business model centered around the gift model pioneered by Millennium and the 50/50 deal led by Regeneron. In the former, the idea is to let your partners give you gifts. For Agios, it was Celgene giving them first pick on the 50/50 assets and the option for exclusive rights to what became Tibsovo. But for the gift model to work, a startup has to design partnerships based on a new biological hypothesis not just products. Millennium built a series of valuable partnerships that improved over time with their genomics platform as the field was just beginning to grow and narrowing their deals to grow their partnership based rapidly. For Agios, the Celgene deal was established based on new science in cancer metabolism. Beyond generating a new hypothesis, the hard part of the gift model is getting narrow exclusivity on the deals to retain as much IP as possible.
Agios used the Celgene deal to grow efficiently and develop their own wholly-owned internal product. In 2017, Idhifa (enasidenib) was approved by the FDA for r/r AML patients with IDH2 mutations. Then in 2018, Tibsovo (ivosidenib), wholly-owned by Agios, was approved in r/r AML with IDH1 mutations. Tibsovo had the potential to build a pipeline-in-a-pill. Agios did legendary work to go from basic research to the clinic and to commercial. The last part is rarefied air for any biotech company.
The Millennium, and Agios, dream hasn’t been achieved yet. There are a lot more companies to be built on top of the aircraft carrier. Especially as sequencing tools become more precise going down to single cells and resolving spatial relationships combined with new tools to measure the proteome, glycome, lipidome, metabolome, and a lot more there is still work to be done. Earlier generation companies like Millennium built a platform to find new targets/pathways and connect them to a disease. Successive generations riff on Millennium in some way by using more precise tools and data to go beyond connection and go deep into disease-specific biology. Agios and next-generation platform biotech companies are building better maps of disease. As the atlas of biology becomes more comprehensive, the ability to develop new medicines to take into account diversity will improve response rate and lead to potential cures. Particularly for oncology, an issue is that most treatments generate partial responses or have relapses due to the heterogeneity of cancer. Single-cell tools and more can first measure this diversity and inform the design of new drugs to take into account cancer heterogeneity.
Agios pioneered drugging cancer metabolism. Another company will lead the way to pioneer drugging immune cell metabolism. Metabolism within the tumor microenvironments (TME) not only impacts cancer cell growth but also the activity of immune cells within the TME. Immune and cancer cells have converging metabolic pathways putting them in competition for similar resources. This creates a potential opportunity to design drugs to target metabolism to help immune cells kill cancer cells. Moreover to make things a bit more difficult, metabolic profiles are diverse across each TME creating another level of complexity to take into account for drug development. This creates a massive need for better metabolomic tools to maximize the potential of immunometabolism to help patients.
In 2021, Agios sold off their cancer drug pipeline for $2B ($1.8B cash) with royalties to Servier. Now Agios is focusing on the clinical development of mitapivat to activate pyruvate kinase R (PKR) to treat pyruvate kinase (PK) deficiency. Agios had some commercial hiccups that slowed the company down and was the difference between the company being a >$10B business versus a ~$2B one where it’s at. On a side note, Arrakis Technologies is building the platform to help biotechs like Agios stay independent and succeed commercially. Third Rock was the best partner for Agios - combining the Millennium playbook with world-class inventors led to 2 approved cancer drugs and an iconic partnership that set that standard. The Agios story unveils new opportunities in immuno-metabolism, metabolomics, and using spatial genomics for drug development. Just as Millennium led to several successful heirs, Agios is likely to do the same over the next decade.