Putting together a quarter-billion dollar pharma company from ten mergers in four months is not for the faint-hearted – but that’s what biotech investment guru Francesco de Rubertis has achieved with his latest project Centessa. In an interview with pharmaphorum’s news editor Richard Staines, de Rubertis explained how he did it and how the company is taking a unique approach to R&D.
The idea behind Centessa had been in Francesco de Rubertis’ mind for many years – but the influx of investment into pharma and biotech during the last year is what has allowed it to become a reality.
It was only in September last year that the co-founder and partner at life sciences investment firm Medicxi decided that the time was right to realise his vision, which he describes as an “asset-focused” model.
At its heart are ten biotech startups that Medicxi has already invested in and run the rule over – but the philosophy runs deeper than that, according to de Rubertis.
Each company was selected because they are based around a single asset, which in de Rubertis’ view would be good enough to be a lead drug in the pipeline of any pharma company.
Initially the company, where de Rubertis will serve as chairman, will focus on 15 drugs.
Only four of the drugs are in the clinic, but each biotech will be focused solely on the development of one or two potential medicines.
The final part of the strategy is that each subsidiary is led by biotech entrepreneurs who are focused around the development of their drugs.
Each CEO is passionate about their projects, and are not career scientists who are looking for a 30 year stay at a big pharma running lots of different projects.
It’s this combination of elements that de Rubertis thinks will make the company a success after raising $250 million in Series A investment by General Atlantic, with co-leaders Vida Ventures and Janus Henderson Investors heading a list of blue-chip VCs such as Boxer Capital, Franklin Templeton and LifeSci Venture Partners.
The CEO is Saurabh Saha, formerly global head of translational medicine at Bristol-Myers Squibb.
Chief scientific officer is Moncef Slaoui, who was asked to step down from his gig as chief scientific advisor on the US government’s Operation Warp Speed when president Biden took charge in January.
Slaoui is also a partner at Medicxi, and has previous experience at GlaxoSmithKline, which famously trialled a similar R&D approach but with limited success.
The Centessa Subsidiaries are comprised of ApcinteX, Capella BioScience, Janpix, LockBody, Morphogen-IX, Orexia Therapeutics, Palladio Biosciences, PearlRiver Bio, Pega-One and Z Factor.
Projects include treatments for haemophilia, idiopathic pulmonary fibrosis, various kinds of cancer, pulmonary arterial hypertension, narcolepsy, kidney disease and the rare disease alpha-1-antitrypsin deficiency (see box at page end).
Putting all the pieces together has been a tough ask for de Rubertis, who spoke to pharmaphorum immediately after one of the company’s first board meetings.
Ten mergers in two months
He told us: “Doing one M&A is a big endeavour. Imagine doing ten – it has been pretty intense.
“I had the idea for a few years but I decided to get going in September 2020.”
Most mergers involving several biotechs occur because they are failing and come from the need to salvage something from various burnt-out projects.
But in this case each company was thriving and had offers on the table from big pharma companies wanting to add their drugs to their pipelines.
It took all of de Rubertis’ powers of persuasion from his many years in biotech investment to get them to buy into his idea – but once they were convinced the project came together quickly.
De Rubertis explained: “These were not failing companies. In that case it is easy to do mergers.
“I had to have a few calls over weekends and nights. I had to explain to them the full power of the Centessa vision.
“I had to spend two months convincing CEOs then two months doing ten M&As alongside fundraising.”
But he said once he had the CEOs on board, all the pieces fell into place. “Execution has been easy,” he said.
Big pharma R&D woes
De Rubertis, who made his name as an investor at Index Life Sciences before joining Medicxi, said he expects a better success rate than at GlaxoSmithKline because R&D at Centessa will be more focused and led by data rather than a broader corporate strategy.
While GSK abandoned a similar approach to R&D in 2017 when Emma Walmsley took over, de Rubertis thinks that because each subsidiary will make decisions based on results and data produced by their projects, success is much more likely.
GSK’s pipeline is still thought of as lacklustre in some quarters and the company has had to bulk it up with acquisitions such as the cancer drugs firm Tesaro to keep things moving, despite a new approach from research chief Hal Barron.
De Rubertis noted the wider issue with R&D at big pharma, which he says is inherently more conservative and less innovative.
While they are good at getting drugs to patients, big pharma companies sometimes struggle at the early part of R&D because of their risk-averse nature and corporate goals, he argues.
He said: “They are fantastic implementation machines, but that same strength is not matched with the first part of the business, which is early stage R&D.
“The bar for a great molecule goes down when top-down determination informs where research goes. Research is not free to go where the data goes.
“Data is important for a company that has one single product. Every decision will be driven by data.”
No career scientists
The R&D culture at Centessa will be radically different from big pharma companies because of the entrepreneurial spirit that drives each of them, according to de Rubertis.
He said that one reason that GSK’s attempt at a similar model failed to produce results was the mindset of the people running them.
“They were populated with people who were looking at their career plan; they did not see their career linked to a single molecule.”
Meanwhile at Centessa each biotech is run by people who are “single purpose scientists” who will likely go back to academia if their drugs don’t work in the clinic.
The drugs being developed are all “gold medal” standard according to Centessa and would be strong enough to catalyse development of a biotech without his intervention.
Centessa is also quite UK-centric, with five subsidiaries in the UK, two in the US, and one each in Canada, France and Germany.
Although the most advanced products (see box at page end) are barely in the clinic, de Rubertis said there will be clinical data from many Centessa programmes emerging over the next three years.
Going forward, the idea is to establish Centessa as a pharma player in its own right and grow by acquisition of single asset companies that would otherwise be snapped up in “bolt-on” deals by big pharma rivals.
De Rubertis added: “We are going to grow by acquisition. Company number 11, 12, or 13 will be anywhere where the management board finds a single asset company at clinical and preclinical stage.”
For the entrepreneurs running the biotechs, Centessa offers the kind of infrastructure support and advice available from a big pharma, with each CEO getting shares in return for getting on board.
This provides security in case their individual project does not work out.
The subsidiaries on board so far are also sold on the model that allows them to be operationally independent – within reason.
“You drive the car as long as Centessa does not think you are going down the wrong path,” said de Rubertis.
“We are going to have a really good pitch for the scientists.”
It’s this philosophy that de Rubertis says will lead to Centessa becoming an established name in the industry as a stand-alone entity, rather than another abandoned biotech project.
He concluded: “I want Centessa to be a really big pharma company in the future – with good R&D productivity.”
Centessa’s subsidiaries
ApcinteX
ApcinteX is developing SerpinPC, a specific inhibitor of the anticoagulant protease activated protein C (APC), for the treatment of haemophilia A and haemophilia B, with or without inhibitors.
Capella BioScience
Capella BioScience is developing CBS001, a neutralising therapeutic monoclonal antibody to the inflammatory membrane form of LIGHT (known as TNFSF14), for the treatment of idiopathic pulmonary fibrosis. Capella BioScience is also developing CBS004, a therapeutic monoclonal antibody to blood dendritic cell antigen 2 (BDCA2), for the treatment of lupus erythematosus (systemic and cutaneous) and systemic sclerosis.
Janpix
Janpix is developing a novel class of selective dual-STAT3/5 small molecule monovalent degraders for the treatment of various hematological malignancies, including leukaemias and lymphomas.
LockBody
LockBody is pioneering a platform technology to develop LockBody CD47 (LB1) and LockBody CD3 (LB2) for optimal targeting of solid tumours by the innate immune system.
Morphogen-IX
Morphogen-IX is developing MGX292, a protein-engineered variant of human bone morphogenetic protein-9 (BMP9), for the treatment of pulmonary arterial hypertension.
Orexia Therapeutics
Orexia Therapeutics is developing oral and intranasal orexin receptor agonists using structure-based drug design approaches. These agonists target the treatment of narcolepsy type 1, where they have the potential to directly address the underlying pathology of orexin neuron loss, as well as other neurological disorders characterised by excessive daytime sleepiness.
Palladio Biosciences
Palladio Biosciences is developing lixivaptan, an oral non-peptide, new chemical agent that works by selectively suppressing the activity of the hormone vasopressin at the V2 receptor, as a treatment for autosomal dominant polycystic kidney disease with the goal of slowing the progression of kidney function decline and avoiding the liver safety issues associated with tolvaptan.
PearlRiver Bio
PearlRiver Bio is developing potent and selective oral exon20 insertion mutation inhibitors intended to have minimal activity on wild-type EGFR and optimal pharmacokinetic properties, for the treatment of EGFR exon 20 insertion (with potential to target and treat Her2 exon 20 insertions) non-small cell lung cancer (NSCLC). PearlRiver Bio is also developing oral inhibitors targeting C797S-mutant EGFR and undisclosed next generation EGFR inhibitors for NSCLC.
PegaOne
PegaOne is developing imgatuzumab, a humanised, non-fucosylated, anti-EGFR monoclonal antibody for the treatment of cutaneous squamous cell carcinoma and other solid tumour indications.
Z Factor
Z Factor is developing ZF874, a small molecule chemical chaperone intended to rescue folding of the Z variant of alpha-1-antitrypsin, increasing serum levels of active protein and reducing accumulation in the liver, for the treatment of alpha-1-antitrypsin deficiency.
