Novartis Acquired Biotech Startup CoStim to Expand Oncology Portfolio

Novartis AG (NVS), in an effort to expand its oncology portfolio, announced the acquisition of a biotech startup called CoStim Pharmaceuticals. CoStim, based in Cambridge, Massachusetts, was established in 2012 by MPM Capital and received investments from businesses such as Atlas Ventures. The acquisition was disclosed yesterday, with the value of the deal remaining undisclosed.

The oncology field is currently working on developing a PD-1 fighting drug with many of the big pharmaceutical companies in the race. The focus is to produce the first PD-1 immunotherapy and get it approved by the Food and Drug Administration (FDA). Though Novartis already has an oncology portfolio and a large pipeline in the therapeutic area, the acquisition allows it to enter the Anti-PD-1 therapies race.

Immunotherapy is the frontier of research in fighting cancer, as its goal is to alter the response by either turning off or enhancing the immune response of the body. The acquisition will improve Novartis’s current approach, which is to remove T cells from cancer patients, and after genetically modifying them to fight cancer, reintroduce them into the body. On the other hand, CoStim was developing drugs that would allow the T cells to block cancer signals without their extraction. The acquisition puts Novartis in a stronger position to discover cancer immunotherapy.

According to IMS Health, by 2017 oncology is going to be the largest therapeutic area in terms of drug sales, estimating close to $80 billion. Major pharmaceuticals are focusing on oncology, with Roche Holding (RHHBY) the current leader in the area – its oncology revenues in 2013 were $25.2 billion.

The oncology pipelines are developing quickly, with Merck (MRK) expecting it will launch its drug MK-3475 by the end of this year. Bristol-Myers Squibb (BMY) is currently in the lead in the immuno-oncology space, with Yervoy and nivolumab in its pipeline. Yervoy gave Bristol-Myers the first mover advantage; the drug’s revenues equaled $960 million in 2013. As cancer drugs are being developed, they are being rigorously tested for combination therapies. Yervoy is already in the market, and Bristol-Myers is testing it with nivolumab, which has been showing better results. Merck had marginally better results though, and is expected to take the lead in the late stages of certain cancers.

CoStim’s research was started by three scientists from Boston named Vijay Kuchroo, Arlene Sharpe, and Gordon Freeman, who worked in labs at Harvard Medical School, Boston Children’s Hospital, Dana-Faber Cancer Institute, and Brigham and Women’s Hospital. This acquisition increases the competition in the market and makes Novartis a stronger contender.

Robert Millman, co-founder of CoStim, said: “I am thrilled that we were able to bring together compelling science with a world class team to build the premier biotech company developing a focused and highly attractive pipeline of antibody agents directed to costimulatory targets for the treatment of cancer.” He added: ”Clearly Novartis shares our vision to become leaders in the treatment of cancer with a pipeline of immune-oncology agents.”

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