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4 April, 2006 - 11:02 By Staff Reporter

Nothing too loose about Utrecht firm’s bio venture

In a region famous for its knowledge-based economy, a new ‘experience-based’ biotech venture has set up in Cambridge, raising just under £9m in second round VC funding.

PanGenetics, which was founded in the Netherlands, plans to leverage its Cambridge location and industry leading know-how from the city to build a world-beating antibody therapeutics company.

The company has announced the closing of an oversubscribed, 13 million Euros series B round led by ABN Amro Capital, with participation from Credit Agricole Private Equity and Series A seed investor, Index Ventures.

The new funds will enable PanGenetics to continue clinical development of its lead antibody, a human CD40 antagonist called PG102, with a view to filing an investigational new drug (IND) application at the beginning of next year. IND approval usually marks the beginning of clinical trials.

An earlier version of the antibody has already been in an open label clinical trial, where it showed safety and signs of efficacy.

The company will conclude in-licensing of additional drug candidates, as well as hire additional senior management to complement the wealth of antibody development expertise already present in the company.

CEO Dr Kevin Johnson told Business Weekly: "With sites in Utrecht and Cambridge we have direct access to the two biggest centres for antibody expertise in Europe.

"But you can’t be parochial when it comes to developing a product and we are scouring the world for the best early-stage antibodies. We’re already in discussion with leading academic institutions and companies across Europe and in the US."

Melbourn Science Park based PanGenetics is one of a relatively new breed within the biotech industry, operating a no research, development only or ‘NRDO’ business model. The strategy relies on an ability to hand-pick and in-license promising drugs at a very early stage and then meticulously project manage the early stage development, building up value to the stage where the baton can be passed to a larger pharma or biotech player.

All of the development work is outsourced to keep overheads as low as possible and in PanGenetics’ case, it plans to take antibodies at the late research stage through to clinical proof of concept.

Clearly this is almost entirely dependent on the personnel at your disposal and the company has tapped into a deep well of local expertise to expedite its vision.

This is particularly the case with recently appointed CEO, Dr Johnson. He was part of the start-up team at the company now widely regarded as the UK’s leading biotech – Cambridge Antibody Techn-ology.

He directed research and new therapeutic product development, including Humira, the first fully human monoclonal antibody drug to reach the market and the first blockbuster drug (sales of $1bn plus) to come out of UK biotech.

A former board member and CTO at CAT, Dr Johnson was also part of the management team that listed the company on the LSE.

PanGenetics is able to draw on further know-how from the CAT stable in the form of COO, Dr Duncan Casson. Dr Casson was formerly VP of programme management and manufacturing at CAT, bringing with him a set of skills vital to the success of the NRDO model.

Agility is the watchword for companies like PanGenetics. Trials must be micro-managed to very quickly act upon any issues as they arise and even take preemptive action. NRDO’s must act ruthlessly – if a product is not progressing to plan, development must cease immediately to protect cash resources.

Dr Johnson said Pan-Genetics was in the process of recruiting a CFO from the Cambridge area and that a worldwide search was underway for a chief medic.

While there are other companies operating similarly lean business models – speciality pharma companies like Alizyme – PanGenetics is the first to apply it in the antibody space.

"I remember when you couldn’t give antibodies away," Dr Johnson said. "Now they account for 30 per cent of the pharma pipeline. 17 have been approved generating sales of $10bn a year. They really can’t be ignored anymore."

Dr Johnson said that PanGenetics would typically seek to acquire a molecule for around 1 million Euros, investing from six to seven million Euros and two to three years in order to take the product to Phase IIa. At around this stage, the antibody would be valued at between $50m and $100m. "These are industry standard data points," Dr Johnson said.

Even working within the bounds of the historical attrition rates, the model represents a remarkable internal rate of return. With the expertise and contacts PanGenetics has at its disposal it is confident it can achieve slightly higher success rates than the standard of between one in three and one in four.

"Antibodies are big news. For example, Genentech is now an antibody company and Amgen recently acquired antibody company, Abgenix for $2bn. We looked at the market and saw that these companies are valued not on their technology platforms, but on their products.

"We decided we didn’t need to develop a technology or waste time and money building infrastructure. Like most specialist sectors, the antibody community is a small world and we plan to source promising molecules through our network of friends, ex-colleagues and contacts.

"The skills required to discover a really good antibody are quite different from those required to develop it and that is where we have proved we excel."

PanGenetics, which rec-eived seed funding of $2m in September of last year, was founded in 2005 in Utrecht by Mark de Boer and Jeff Price.

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