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Genentech Gains Microbe Drug Discovery Tech in $1B Deal

Collecting soil samples

Soil samples collected by the Sean Brady lab (Rockefeller University)

9 May 2018. Biotechnology company Genentech is licensing a process from a start-up enterprise that discovers small molecule drugs from naturally occurring microbes found in soil. The collaboration with Genentech could bring Lodo Therapeutics Corp., a 2 year-old company in New York, nearly $1 billion if all aspects of the agreement are completed.

Lodo Therapeutics is a spin-off company from the lab of Rockefeller University biologist Sean Brady who studies bacteria and other microbes in soil as natural sources of small molecule, or low-molecular weight, drugs. Brady, a co-founder and scientific adviser to Lodo Therapeutics, investigates the genomics of soil microbes, particularly organisms not yet cultured in research labs. The lab uses techniques from micro- and molecular biology, as well as organic chemistry, to reveal previously unrecognized gene clusters with a potential to transform into natural therapeutics.

An example of this process appears in a recent publication (March 2018) where Brady and colleagues discovered a new class of antibiotics called malacidins from previously uncultured microorganisms found in soil. Not only did malacidins clear up infections in lab animals, including some infections resistant to other antibiotics, the targeted bacteria did not appear to develop a resistance to these antibiotics.

When the company formed in January 2016, Lodo Therapeutics licensed Brady’s technology for discovering drugs from soil microbes that often resist conventional lab culturing techniques. The technology bypasses this culturing stage, instead relying on genomic sequencing and computational methods to assemble a large library of microbial DNA, as well as techniques for screening these molecules. In fact, the company asks for soil samples from the public at large, to add to its soil microbe DNA collections. Lodo says it plans to use this technology to discover treatments for infectious diseases, as well as cancer, metabolic, and rare disorders.

The new agreement gives Genentech, a division of drug maker Roche that develops treatments with biotechnology, access to the Lodo Therapeutics drug discovery technology to identify new active molecules with potential to address multiple, but undisclosed, disease targets. In return, Lodo Therapeutics is receiving an initial payment, the amount of which was not revealed, with the company also eligible for payments tied to future research, development, and commercialization milestones. The parties say the initial and milestone payments total $969 million. Lodo will be eligible as well for royalties on sales of products that result from the collaboration.

Lodo Therapeutics was formed by Accelerator Life Science Partners, a life sciences venture investor and business incubator in Seattle and New York that led the group financing Lodo’s first funding round when the company launched in January 2016. Participants in the company’s initial $17 million financing included other venture investors, pharmaceutical companies, and the Bill & Melinda Gates Foundation. Many of Lodo’s executives are loaned to the company from Accelerator until permanent managers are hired.

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