

Meet Stemcentrx, the $US10.2 billion Silicon Valley firm that's curing cancer


Brian Slingerland is not your average scientist. The Stemcentrx co-founder and chief executive was an up-and-coming investment banker, before he met his co-founder Scott Dylla, who was working at Stanford University and researching the role of stem cells in cancer.

The pair had both lost family members to cancer and their chance meeting in 2002 kicked off a partnership that was solidified by the founding of Stemcentrx in 2008.

Now, 14 years after their first meeting, the business has been sold to pharmaceutical giant AbbVie for up to $US10.2 billion ($14.2 billion), making it the largest private biotech deal in history. Not by coincidence, it has also made huge headway into the treatment of cancer.

Stemcentrx scientists analyse the cells of tumours to identify the cancer stem cells. Alexander Raths

Speaking to The Australian Financial Review from the company's South San Francisco headquarters, Mr Slingerland said he preferred people not to focus on his previous investment banking career, having now spent more time running Stemcentrx.

"I hadn't done much science since high school biology. When I met Scott and I asked about what he was doing, he would tell me, but he would also give me papers to read, journals to study and when I was finished I'd ask for more and he'd give me more," he said.


"He's been my PhD advisor if you will."

A different approach

Just like most unicorns (billion dollar valued private companies), Stemcentrx does not fit with the status quo in terms of biotech companies taking on cancer.

The basic premise of its research - that stem cells are not always good and that cancerous stem cells are actually the root cause of the disease and why it often recurs - is contrary to the beliefs of many in the industry.

Most treatments target the growing tumours, with the belief that the majority of cells can sustain tumours.

Stemcentrx has five drug trials underway at various stages. Its most advanced drug, known as Rova-T, is a biomarker-specific antibody drug that targets stem cell protein DLL3, which the company discovered was present in more than 80 per cent of small cell lung cancer patients.


The company has been running human trials of the drug.

Its most recent results are due to be announced next month, but even the phase one results showed significant improvements in relapsed small cell lung cancer patients who had failed at least one standard therapy, with a response rate of 44 per cent in patients with a high level of DLL3.

One patient, a 55-year-old man who had failed two prior lines of treatment, has now been alive for well over a year following Rova-T treatment.

Approximately 31 per cent of the patients had grade three or greater adverse effects from the drug, meaning the human body may tolerate it better than chemotherapy.

Ongoing cure debate

Even after the company's strong results to-date, the debate about how to treat cancer continues.


"I'm not sure that we have convinced the industry yet," Mr Slingerland said. "The cancer stem cell approach is still debated, but what's important and what the industry looks for are results, clinical results, to show you have something that's improving survival.

"That ends up being the gold standard that people look for and we're at the point that that's what we can provide."

Stemcentrx receives new tumours every day at its office in South San Francisco and scientists analyse every cell of these tumours to identify cancer stem cells and therapeutic targets.

The business houses more than 700 patient-derived xenograft tumours (tumours that have been transplanted into another species). Each day the company grafts tumour cells into mice that have been genetically engineered to have no immune systems.

Their lack of immunity allows the cancer to grow and this tumour is then divided into different cell types. Through a process called "limitation dilution" each fraction is then placed into other mice.

This lets the company determine which cancer cell always regenerates, which it then deems the cancer stem cell.


Complete control

Stemcentrx is also unique because unlike most pharmaceutical companies, the business controls every step of the process onsite, including the manufacturing of the drugs.

"The manufacturing was not in the original business plan, but we realised if we don't own it, then it would take another two years to get this drug into humans and that's unacceptable," Mr Slingerland said.

The sale of Stemcentrx to AbbVie represented a huge windfall for its biggest external investor, Peter Thiel's Founders Fund, which had invested about $US300 million in the company.

Prior to the sale the company had raised a total of $US550 million. Other investors include Fidelity Investments and ARTIS Ventures.

"I think what we've done is unique and it has the potential to really have an impact on survival for patients," Mr Slingerland said in reference to the company's valuation.


The median time it takes for most large biotech companies to reach an exit is 22 years, significantly longer than Stemcentrx's eight year journey.

As well as small cell lung cancer, other cancers the company is targeting in its clinical trials include types of breast cancer, ovarian cancer and other major solid tumours.

Global trials

The company is now looking at doing global clinical trials and Mr Slingerland said Australia was being strongly considered.

"While we haven't done trials in Australia, the feedback that I've heard is that it's a very good country to work with and the Therapeutic Goods Administration seems to be reasonable and patient with a company-friendly regulatory process," he said.

"Not to mention there is a population of patients who have the disease, who I've heard also are maybe more willing to engage in trials than other countries, on a proportional basis."


Unlike most pharmaceutical companies, Stemcentrx is run more like a tech company.

Its 150-plus staff are given incentives to take risks and they feel comfortable debating scientific paradigms.

But Mr Slingerland says his primary focus has always been on improving the treatment outcomes for cancer patients. Unlike many in the industry, he doesn't shy away from talking about a possible cure.

"When we started the company, we didn't publish a paper until years afterwards. It was about translating great science into real manufactured drugs available for clinical studies, and that's one of the things we did really well," he said.

"There is no vitamin that cures all cancers… [But] the more you can break it into a disease subtype by subtype, or get it to a manageable level where you see a consistent pattern within that, the better chance you have of delivering a cure."

The reporter's trip to San Francisco was co-sponsored by Trimantium Capital.


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