Bayer AG has agreed to pay $240 million in cash plus as much as $360 million in milestones for total ownership of Bluerock Therapeutics, a cell therapy company it launched and funded with Versant Ventures in 2016 with an initial $225 million series A investment. Valuing Bluerock at nearly $1 billion, the deal gives Bayer full rights to the startup's Cell+Gene platform, as well as a Parkinson's disease (PD) program expected to enter the clinic by year-end.

"Our vision is to build the premier cell and gene therapy division in the industry," Emile Nuwaysir, president and CEO of Bluerock, told BioWorld. With access to new capital, expertise and a longer time horizon, "we're poised for the next stage of growth," he said.

Bayer and Versant initially launched Bluerock to build a regenerative medicine company that could employ induced pluripotent stem cells (iPSCs) to address cardiovascular and neurodegenerative disorders. Along the way, they added immunology to its focus and genetic editing capabilities with potential application across a broad range of indications, including cancer, through a partnership with Editas Medicine Inc. (See BioWorld, Dec. 13, 2016, and April 4, 2019.)

"From the beginning, we've had a shared vision with Bayer, Bluerock and Versant to create an entirely new generation of cell therapies," Nuwaysir said. To "harness the full potential of the cell and gene, you needed to put both of them under industrial control and have commercial rights to both. We've achieved that," he said.

Chasing a first

Nuwaysir will continue to lead his 130-person team as an independent company within Bayer, he said – a point underlined by the fact that the Leverkusen, Germany-based company has no intention of interfering with Bluerock's partnership with Editas, despite having a substantial relationship with Editas competitor Crispr Therapeutics AG via their joint venture, Casebia Therapeutics LLP. (See BioWorld, Jan. 26, 2017.)

In the months to come, Bluerock and Bayer are likely to be busy preparing to launch a phase I/II trial of the company's PD asset. While emphasizing that the primary endpoint of the two-year study is safety, "these are Parkinson's patients and we do expect to see efficacy," Nuwaysir said. "If it plays out the way I expect, we will reverse motor control deficit in a Parkinson's patient and reinnervate the human brain, a first for medicine," he said.

Due to the nature of the program's approach, using dopaminergic neurons, efficacy isn't expected to appear for at least a year. "When you put the neuron back in the brain, it's not a simple dopamine pump that's cranking out dopamine in the mid-brain. It's a physiologically responsive neural circuit that turns on and off with the body's demand," he said. Because of that, it can take months for the cells to build the neural connections needed to restore a circuit.

Meanwhile, if Bayer's plans retain alignment with what Bluerock has indicated on its website, programs targeting heart failure, fibrosis and multiple neurological indications could all reach preclinical proof of concept in the months ahead.

An ambitious investment

Versant has made substantial investments in cell and gene therapies over the last five years, multiple times with Bayer. The pair backed another iPSC-focused startup, Century Therapeutics Inc., with Bayer and Fujifilm Holdings Corp. as recently as July. In December 2015, Versant helped co-found Casebia, too. But "Bluerock is one of the more ambitious companies we did along that walk," Versant's managing director, Jerel Davis, told BioWorld. In looking at how to move it ahead, he said, "we either had to take this company on the path to broadening the syndicate and going public or think about other options."

Earlier this year, when Bayer expressed an interest in taking full ownership of the company, "it wasn't an easy decision for us," Davis said, because Versant still sees a lot of value in its platform and pipeline. "But Bayer's resolve and commitment to backing cell therapies and Bluerock's operations was going to be good for the pipeline, good for the team, and good for us as investors. So, I think it's a good outcome for a company that's two-and-a-half years old," he said. (See BioWorld, July 2, 2019.)

In 2018, Bayer recorded an equity-method loss of €26 million (US$29.1 million) on its investment in Bluerock, following a 2017 loss of €15 million.

Following the Bluerock buy and last year's sale of another Bayer and Versant-backed venture, Inception 4, to Ophthotech Corp., further co-investments by the partners seem likely. And, with $700 million raised late last year to fuel further company-building efforts, they seem downright inevitable. Versant, like Bayer, continues to remain interested in regenerative medicine, too.

"Keep watching. You'll see some more from us in the field," Davis said.