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$210M Pfizer Deal Validates Small Firm

Sun, 04/17/2011 - 11:33pm
San Diego Business Journal

Robin Jackman, Zacharons president and CEO, is the first to admit that there arent too many people outside the biotech world who understand the science at the core of his small company.

Glycobiology, to a lot of people, is a new word, Jackman said, referring to the study of how sugars or, more specifically, glycan molecules that are complex sugar polymers in the body influence biological events such as diseases. But its an area that has enormous therapeutic potential.

Fortunately for Zacharon, the folks at New York-based pharmaceutical giant Pfizer Inc. not only understand this science, but see clear market potential for the platform Zacharon has developed for targeting glycans to treat a range of rare and life-ending genetic disorders.

In a deal announced April 7, Pfizer agreed to pay Zacharon $210 million through a combination of upfront payments and research-and-development funding. Zacharon also is eligible for additional payments for meeting development milestones, plus royalties and sales milestones after the drug reaches the commercial market.

Zacharon was actively seeking a partner that would be able to take its small-molecule therapies through clinical testing and into medical settings, Jackman said. Pfizer, which started up a business unit last summer to focus on orphan (or rare) diseases, happens to specialize in small-molecule medicines and was also looking for a partner with commercial promise.

A Significant Need

Were going to have the Zacharon scientists continue to do what they do best, and Pfizer will be doing all of the other things that must be done to develop a drug, said Ed Mascioli, head of Pfizers new Orphan & Genetic Diseases Unit. That includes making sure the drug is safe, is being absorbed into the bloodstream as intended, and has all of the other properties a drug must have before its given to patients, Mascioli said. He estimated that clinical trials could begin in three years, with commercialization happening two years after that.

Clearly, both of us are interested in moving this forward as fast as possible, Jackman said. Zacharon will hire two new employees to help speed the development, bringing its full-time staff to 14. The clinical need is pretty significant.

The diseases that Zacharon targets lysosomal storage diseases are very rare, but their diagnoses are bleak. People affected are infants and small children, and the disorders can cause mental retardation and death at a young age, Jackman said.

Current treatments involve enzyme replacement, which is done through an IV. But enzymes are too large to enter the brain, and thus cannot help neurological symptoms. Also, the enzyme-replacement approach doesnt work for all lysosomal storage diseases.

Small-molecule drugs, on the other hand, can be taken in pill form and break the so-called blood-brain barrier, Jackman noted. And Zacharons platform shows promise for helping a whole range of diseases, including rare cancers.

Years of Hard Work Paying Off

The Pfizer deal is very validating to the company, said Jay Lichter, Zacharon chairman and a member of Avalon Ventures, the venture capital firm that has provided most of the funding for Zacharon. It confirms everything weve been trying to do for the last three or four years.

Lichter, who served as chief executive officer of Zacharon in 2008 and early 2009, said its encouraging that existing enzyme-replacement therapies for lysosomal storage diseases are showing sales of $500 million to $600 million annually. Its clear that the market is there, he said. Insurance companies are willing to pay a premium if youre able to improve the quality of life for these kids.

He noted that theres been greater interest recently among big pharmaceutical companies to pursue drugs for orphan diseases, in part because there are fewer regulatory hurdles and less competition. With a drug that treats a chronic disease such as diabetes, the U.S. Food and Drug Administration requires two well-controlled clinical trials. But with diseases affecting fewer than 200,000 people in the U.S., only one trial is needed. When the alternative is death, you can put up with more side effects, he said.

Jeffrey Esko, a company co-founder who is now a professor in the Department of Cellular and Molecular Medicine at UC San Diego, called the Pfizer deal a huge step for Zacharon.

To have a partner thats one of the largest pharmaceutical companies in the world, thats something we dreamed about, said Esko, who serves as a scientific adviser to Zacharon. It shows that Zacharons approach is a recognized strategy.

Kelly Quigley is a freelance writer for the San Diego Business Journal.

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