Virtual drug company ‘always in fundraising mode’

A world away from the sprawling offices and labs of major pharmaceutical companies, Irishman Dr Michael O’Neill is busy running the pre-clinical side of a “virtual drug company” from his home office in west London.

The Inflection Biosciences research and development director is managing “everything via the phone and the internet”. He spends his day finding the right people to “take each separate step for us”, as his company pieces together the research and experiments necessary to create revolutionary drugs for cancer treatment, in particular leukaemia.

“At the moment, for example, we’re testing the compounds involved to make sure they behave in the body like drugs,” says Dr O’Neill, “that they don’t disappear within seconds, get eaten by enzymes or last forever and become toxic.”

Meanwhile, Inflection's CEO, Darren Cunningham, is back in Dublin monitoring how the company will pull together €8 million in investment over the next three years to help reach the stage of human testing on the drugs being produced.

It’s a “hugely competitive process”, says Cunningham, who hopes to raise these millions from a combination of backers.

"There are traditional venture-capital companies, corporate versions (which are arms of the larger pharmaceutical companies active in the early stages of drug development) as well as specific cancer foundations in America and across Europe, " he says.

With the new European research framework, Horizon 2020, seeing cancer research as a “priority area” for investment, Cunningham and O’Neill will also look to them for possible funds.

It’s a “tough process”, admits Cunningham, and one which is pointless “if you don’t differentiate yourselves”.

Cunningham and O'Neill met in 2011, when the latter – who worked for two decades in the pharmaceutical industry with Eli Lilly, Almirall and Merck – spoke to business development expert Cunningham about the idea of a virtual pharmaceutical business.

“I explained that we wouldn’t have to buy labs, set up offices or anything like that. He could see it as a nice idea but asked me one question: ‘Where are the assets?,” says O’Neill, who only knew at this point that he wanted to focus on cancer treatment.

Undeterred, the pair began a strategy to bring the virtual drug business to life. Self-funded up to this point, they then chose to dip their toes into finding outside money, and Enterprise Ireland stepped in with "feasibility grants of up to €15,000" to fund fact-finding missions at pharmaceutical conferences. In all, the company looked into "over 200" clinical research opportunities across the globe.

Then a tip-off from a friend of Cunningham's led them to Madrid and the Spanish National Cancer Research Center (CNIO). Cunningham and Dr O'Neill arrived in the Spanish capital to be shown "120 slides of the most amazing data" with some projects aiming to crack treatment theories that researchers had been looking into for "years and years" as well as some "Star Trek science", as O'Neill puts it, which were "too out there".

“Then right in the middle of these projects there was a ‘Goldilocks moment’,” says O’Neill, “where we said ‘that stuff is absolutely right’. It was a project targeting an area which other people know about but no one has really explored the possibilities properly.”

The focus was on pan-PIM kinase inhibitors, looking into targeted cancer therapy which positively interferes “with specific cell signalling pathways”.

An agreement was signed six months ago which will see CNIO and Inflection Biosciences conduct preclinical studies of the proposed drug treatments over the next 18 months.

The plan is to then team up with a larger pharmaceutical company at some point in the next “three to five” years to support late-stage clinical development and commercialisation.

In addition to the €8 million needed to further their research, Inflection Biosciences has already secured €450,000 in financing in recent months – some of that came from Enterprise Ireland while the balance was provided by a private investor.

Cunningham reveals that Enterprise Ireland will gain convertible preference shares as part of the agreement and that an “ordinary share investment was taken by the private investor”, though Cunningham doesn’t want to reveal just how much this comes to.

The convertible share option is, says Cunningham, a well-trodden one by start-ups looking for investment as it “balances the risks on both sides” and pushes “valuation negotiations out a little bit until there’s a little more clarity and certainty” in terms of the company’s true worth.

With that initial investment in the bank, and the CNIO agreement in place, Cunningham says he has to get back to piecing together the aforementioned €8 million necessary to get the company to the next stage of development.

“We’re always in fundraising mode,” he says.

“You need to be that way,” adds his business partner. “The phrase they use in this business is ‘you don’t get across the canyon in two jumps’.

“If you get 99 per cent of the way across you’re still dead. You have to be there until the end.”