Washington Editor

Patrick Mahaffy and his former management team from Pharmion Corp., which was acquired last year for $2.9 billion by Celgene Corp., proved to be a safe bet for their early venture capitalist investors. Indeed, the VCs who had backed Pharmion when it was founded in 2000 returned to support Mahaffy again - this time with a substantial start-up package of $145 million.

Mahaffy and three other former Pharmion executives - Andrew Allen, Gillian Ivers-Read and Erle Mast - have launched Clovis Oncology Inc. with venture funding from Domain Associates, New Enterprise Associates, Versant Ventures, Aberdare Ventures, Abingworth, Frazier Healthcare Ventures and ProQuest Investments.

Domain Partner Jim Blair noted that his firm's earlier investment in Pharmion allowed Domain to return more than $200 million to its partners.

"So we thought taking some of that and rolling it back into the team was a good idea," he told BioWorld Today. "When teams have done particularly well for us, it is a fairly easy decision when they come back to us and say they've got some new ideas. We are happy to listen hard and provide good support for them."

Probably the most important guiding principle in venture investing, said Brian Atwood, managing director at Versant Ventures, "is that you always want to back great management teams."

As with Pharmion, Boulder, Colo.-based Clovis is focused on partnering with discovery-based companies and taking responsibility for developing and commercializing treatments for various types of cancer, Mahaffy said, describing the new firm as sort of a "Pharmion 2.0."

Also like Pharmion, Clovis will expand outside of the U.S. and have offices in Europe, with the first to be opened in London, he told BioWorld Today.

"One of the things we did well at Pharmion was take advantage of the network we had in Europe, and we intend to reinvigorate that on behalf of Clovis," Mahaffy said.

While discovery capabilities in biotech and pharma companies have yielded a large number of promising early stage anticancer compounds, the combination of more limited development capacity and increasing financial constraints has reduced the opportunity to bring many of those compounds through clinical development and to the marketplace, Mahaffy said.

"In general, what has happened is discovery technologies and capabilities have begun to really outperform development capacity," he said.

Therefore, Mahaffy said, Clovis has a "tremendous opportunity to be that development and commercial partner for companies that have innovative, exciting products but can't on their own or don't desire on their own to take them forward." And the firm's investors have supported that thesis, he added.

Mahaffy said he expects Clovis to be busy over the next several weeks and months putting together partnerships with small biotechs as well as big pharma firms.

Clovis' partnering focus will be less about the types of technology or targets of its potential partners as it will be with identifying a drug "that we think can significantly improve a patient's life," Mahaffy said.

"What its molecular target is, what technology was used to identify it and manufacture it is a little less important to us than that we find something that we believe, developed properly, can be a significant improvement in the management in a certain type of cancer," he said. "We are more agnostic on technology and much more focused on doing the best we can for patients."

Clovis is unlikely to ever engage in discovery of drugs, Mahaffy said. "There's a whole lot of discovery companies out there, and there's no need for us to compete with them," he insisted.

Mahaffy said Clovis hopes to take advantage of the current environment where major pharmaceutical companies are buying up other big pharmas or biotechs, leaving open more opportunity for companies like his to engage in partnering activities on the development and commercialization side. "There clearly is not enough appetite of big pharma to take responsibility for developing all of the attractive oncology drugs at the discovery or development phase," he said. "So we see great opportunities."

Mahaffy said his firm will start with about 10 employees initially, which the company either has already identified or brought on board.

In addition, he said, because of the positive experience previous employees had at Pharmion, "it will not be difficult for us to attract a team as we go forward. We are enthusiastic about our ability to build a great team as we did at Pharmion."

Mahaffy said it was important for Clovis to have its financing in place before approaching potential partners.

"I didn't want to waste any company's time by trying to get a meeting and say, 'Trust me; I can raise the money.' I'd rather show up and say, 'We have the money; we are committed and ready to partner with you,'" he explained. "Now that we have the financing behind us, it is time to turn our energy toward licensing or acquiring rights to compounds. Those conversations are beginning."

In fact, Mahaffy noted, he and his team already have a full schedule of meetings lined up with other companies during next week's annual meeting of the American Society of Clinical Oncology (ASCO) in Orlando, Fla.

Domain's Blair added that it also was important for the investors that Clovis have a substantial fund to start off, rather than having to spend a lot of time raising money over the next year.

"We wanted to provide a really outstanding, proven team with financial resources so they could go out and execute on their strategy." Now at ASCO next week, Blair said, the Clovis team can "go out and be credible when they talk to people about licensing opportunities. No one need be concerned that they have strong resources behind them."