Date: Oct 27, 2011 Author: Arlene Weintraub Source: xConomy (
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It's rare to see an entrepreneur cheering for a direct rival, but that's exactly what's been happening over the last week or so in New York. It started on October 18, when shares of Boston-based Agenus (NASDAQ: AGEN) jumped 65 percent to $4.43 on news that a GlaxoSmithKline (NYSE: GSK) malaria vaccine containing an ingredient that Agenus supplies performed well in a clinical trial in African children. That ingredient, called QS-21, is a chemical extracted from the soap bark tree, an evergreen native to Chile.
So who was cheering? That would be Jeffrey Gardner, CEO and co-founder of Adjuvance Technologies, an NYC startup that's developing synthetic versions of QS-21, as alternatives to the sometimes scarce natural version that Agenus markets. The Glaxo/Agenus vaccine, he says, "is a good opportunity to prove QS-21 works. Would I prefer that Glaxo license QS-21 from us? Absolutely. But this is pivotal. It will prove the efficacy of QS-21 not just in humans, but in really young humans."
Agenus' stock has since settled back down to $2.71, but over a sushi lunch in Manhattan yesterday, Gardner's enthusiasm for QS-21 was anything but muted. QS-21 is what's known as an "adjuvant"—a substance that boosts the body's immune response to a vaccine. The only adjuvants that have been approved by the FDA are aluminum salts or gels, and vaccine makers such as Glaxo have long been on the hunt for alternatives. About 15 drugs and vaccines containing Agenus' QS-21 are currently in late-stage clinical trials. "People in pharma love QS-21, but it's rare and not always easy to get," says Gardner (pictured above). "That's where we can add the most value."
Adjuvance Technologies was born out of necessity at Memorial Sloan-Kettering Cancer center in New York. Co-founder Philip Livingston, an attending physician at the hospital, was looking for adjuvants that would work in the cancer vaccines he was developing. "He tested literally everything under the sun," says Gardner, himself a scientist whopreviously worked in Sloan-Kettering's molecular pharmacology and chemistry department. "QS-21 was the optimum adjuvant." Agenus supplied QS-21 for some of Sloan-Kettering's experimental vaccines, but the two entities couldn't reach an agreement for moving forward on one of Livingston's vaccines, Gardner says. So a group of scientists at the hospital synthesized QS-21 and used it in a clinical trial of a melanoma vaccine.
Gardner got involved in 2007, and along with Livingston and two other Sloan-Kettering scientists, decided to form a company to commercialize synthetic QS-21. They licensed the intellectual property from the hospital, hired a contract-research organization to manufacture the synthetic molecule, and began reaching out to Big Pharma companies that they knew were testing vaccines.
It's been a long haul—one that Gardner and his co-founders have bootstrapped out of their own pockets—but Gardner says Adjuvance Technologies is now within a month of signing its first deal to supply synthetic QS-21. His goal is to win enough such contracts for the company to be able to sustain itself on fees and royalties from drug companies, rather than having to raise money from VCs. The company is also pursuing grants from the Department of Defense and the government's Small Business Innovation Research program, Gardner says.
Adjuvance Technologies' version of QS-21 is currently included an experimental melanoma vaccine being tested at Sloan-Kettering. In addition to making synthetic QS-21, the company is working on developing entirely new vaccine adjuvants that they hope will prove to boost the power of vaccines even further. Gardner, who operates the startup as a virtual company, says the adjuvants are designed for both purity and stability, so even if the vaccines are left sitting on shelves in a non-climate-controlled environments they won't spoil.
When Agenus' stock skyrocketed on the malaria news, Gardner watched with interest as Wall Street began to debate the true economic value of providing a vaccine component. TheStreet.com, for example, surmised that Glaxo would sell the vaccine for just $10 a dose, and that Agenus would get a single-digit royalty amounting to about 15 cents per dose, or a "mosquito-sized bite," for QS-21. Gardner thinks those who are focusing on the bottom line are missing the point. "The World Health Organization is probably going to pay very little money for this product," he says. "But the doubters of Agenus on the investor side may need to refocus their negativity and understand that this is a launching point for QS-21. Once you've got that approved vaccine adjuvant, your world opens up in many more ways."
As far as Gardner is concerned, if the Glaxo malaria vaccine is approved, it will provide opportunities for every company that's developing vaccine adjuvants, including his. "Best of luck to Agenus," he says. "But I can guarantee you I'm going to be nipping at their heels. I have skin in the game. That's how much I believe in this technology."
