A Biotech Finds Its X-Factor For Survival

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By Shawn Lawrence

Xenon Pharmaceuticals president and CEO Simon Pimstone Life science companies are always on the lookout for new sources of a capital. A growing trend right now has seen many biotech firms allying themselves with major pharmaceutical companies. This has become a major step to ensuring their survival.

One such company following this model is Vancouver’s Xenon Pharmaceuticals. Armed with its genetic-based drug discovery and development pipeline, the company has partnered with some major players in industry including Novartis and Merck & Co., Inc. These partnerships have resulted in some news-making discoveries. But successful partnering is only part of the Xenon story. The final ingredient is the man at the helm of this budding biotech, Dr. Simon Pimstone.

Born in Cape Town, South Africa, Pimstone came to Canada in 1994 in search of opportunity. He isn’t Canadian by birth but considers himself one at heart. Backed by a strong family tradition of medicine (his late father was a professor of medicine and a physician), Pimstone befriended a fellow South African, Dr. Michael Hayden and worked in his lab for close to four years. It was through this friendship, mutual interest and an idea that the two men launched Xenon in 2001.

In doing so, Pimstone was the first member of his family to try his hand at entrepreneurship.

“I’ve always had this kind of this entrepreneurial heart. For example, I used to sell clothes as a medical student to pay my way but this was the first serious foray into business,” says Pimstone of his decision to launch Xenon in 2001.

By the end of that same year he took on the role of president. In 2003, he added another role to his portfolio taking over as the company’s CEO. By 2004, he was on our radar appearing in Biotechnology Focus as a featured innovator. When we profiled him, Xenon was just taking its first steps in transitioning from a drug discovery company to one specializing in clinical development. It was in that article that Pimstone first discussed the next logical course of action for Xenon: partnering certain assets. True to his word, Pimstone’s company has weathered the current economic storm thanks in large part to strategic partnerships. These partnerships have allowed the company to simultaneously diversify and develop several of its own programs.

“Our products are innovative drugs with the potential to transform patient care in pain, diabetes, and disorders of iron metabolism,” states Pimstone. “The drug targets for these products are known to exert a major effect on the disease of interest as they were identified using human genetic studies. Our programs are a mix of partnered and un-partnered products or novel small molecule drugs against targets we have clinically validated in genetic studies. Partnered programs include SCD1 inhibitors for metabolic diseases with Novartis, and HJV antagonists for anemia of inflammation with Roche.”

The biggest milestones to date for Xenon lie in its pain program.

“We have one product (Oral XEN402) in Phase 2 development. It is a novel analgesic to treat pain and with broad utilities for inflammatory, neuropathic, post-surgical and muscular pain. We also have our second product which is a topical form of the same compound which we expect will be in the clinic early in the coming year. We’ve advanced that program to a point where we hopefully will soon have an idea of whether the concept we had of identifying a particular gene has been able to translate into a novel drug with efficacy in humans,” Pimstone says.
Xenon’s first partnership was signed with Novartis in September 2004. Under this agreement, the two companies agreed to work together to develop small molecule therapies targeting an enzyme known as Stearoyl-CoA Desaturase-1 SCD1, which Xenon together with collaborators identified as playing a key role in various metabolic disorders. Together, the two sides made significant advances in its discovery of small molecule inhibitors of SCD1. Further investigations showed that SCD1 enzyme activity largely determines whether fatty acids are processed for fat deposition (energy storage) or for energy usage through beta-oxidation. SCD1 acts like a switch to control fat storage. When SCD1 activity is ‘up’, the switch is flipped in the direction of storing fat, and when its activity is ‘down’, the switch is flipped in the direction of burning fat.

“We developed a proprietary HTS assay, optimized our leads for potency and good drug-like properties, and demonstrated in vivo efficacy using ‘gold standard’ preclinical models of diabetes and obesity. We have generated a significant patent portfolio protecting our intellectual property for this program,” Pimstone explains.

Another partnership, that has Pimstone excited these days was signed in December of 2006 with Roche. This partnership has Roche developing inhibitors of the Hemojuvelin (Hjv) target which Xenon identified as a target for anemia of chronic disease. Xenon had previously discovered HJV as the defective protein underlying the rare genetic disorder juvenile hemochromatosis (Papanikolaou et al., Nature Genetics, 36, 77-82, 2004), and demonstrated that this protein plays an important role in iron regulation and availability.

There’s also the partnership with CDRD, where Xenon has contracted CDRD to perform high throughput screening of Xenon’s compound library against a cardiovascular target.

And of course there’s the latest in the long list of deals, the one signed with Merck & Co.

“This is a combination of a target validation and a drug discovery partnership where we’ll be validating new targets for cardiovascular disease as well as discovering new small molecule therapeutics. These are parallel activities conducted primarily by Xenon, but in collaboration with Merck,” Pimstone says.

Effectively, Xenon is conducting the discovery activities including both the target validation and the drug discovery much in the same way the Novartis collaboration worked.

Pimstone says there’s no secret to forming these partnerships, rather it’s just knowing what to look for in a partner and when partnering makes sense for a program.

“I think it’s really determined on a case-by-case basis. Our business model is focused on risk mitigation and recognizing that in drug development there is significant cost involved. So the first step is deciding which programs under your umbrella are better suited to partnerships and which programs work better un-partnered. The benefit of bringing multiple partners to the table in this form allows us to diversify and strengthen our pipeline in a more affordable ways. It’s a business model that I think in the biotech industry makes sense,” says Pimstone.

The timing of a partnership is also crucial in deciding what you want to get out of it, adds Pimstone. In the case of the Novartis partnership, Xenon was tasked with developing the small molecule therapies and a lot of the in-vivo work to support the optimization of these compounds. According to Pimstone, Novartis took on the responsibility of any larger scale manufacturing, toxicology and any clinical development.

“This was an early deal for us, forged before we had clinical capabilities so it made sense at the time. Now however we would retain such key clinical responsibilities because we have that capability now.”

Of course, as with any partnership, the risk of relinquishing asset value exists, but well structured partnerships can still bring significant benefit. For this reason, in each of its programs, Xenon evaluated the best partners and the form of partnership it wished to take.
“We felt that products with potential for a primary care market should be partnered.

Those products that are more niche or specialist in nature should on the other hand be advanced by us through to market,” he says.

Overall, what the partnerships have given the company is the ability to raise capital that supports both its partnered and un-partnered programs.

“We’ve been able to bring in these partnership revenues to offset a relatively difficult financing environment. Pharmaceutical companies have continued to look for good early stage assets that compliment their own pipelines and we’ve found a way to use this need to our advantage,” Pimstone explains.

Finding and negotiating such partnerships is of course easier said than done. But this is an area where Dr. Pimstone is at his finest. Firstly, he’s not a person who’s afraid to roll up his sleeves and get his hands dirty at senior level. More importantly, he is active in both the local and national biotech communities.

Most notable is his role on the Life Sciences British Columbia (LSBC) executive committee as chair and as chair of the Providence Healthcare Research Institute, a tertiary teaching hospital in BC.

“I’ve always had this strong belief we all have an obligation to make a contribution to society, especially those of us in positions of privilege. I really mean that sincerely and take it seriously. That mindset was cultivated as a youngster in my family and it’s a path which I continue to aspire to. I’ve been quite involved in the community I know well, that being life sciences and healthcare. I make these commitments out of a real sense of obligation to make an impact.”

LifeScience BC (LSBC) is itself an organization that has achieved great recognition on the international stage and has played an important role in contributing to BC’s biotech success.

“There has been a tremendous amount of collaboration and integration in the life sciences sector in BC. LSBC now represents approximately 300 member companies. More recently, we have expanded our mandate beyond human health and have merged the BC Bioproducts organization into ours.”

With respect to LSBC, Pimstone has tried to enhance the benefits of membership and sponsorship with the organization by providing a real service through the association. This includes affecting policy changes that will benefit the BC life science industry. Enabling more investment by the province and by the private sector, while at the same time finding ways to increase participation by the pharmaceutical companies in BC were just some of his goals as chair of the organization.