Infinity will unveil research deal with Novartis

Infinity Pharmaceuticals Inc. of Cambridge will today unveil a two-year drug discovery collaboration with the Novartis Institutes for BioMedical Research, the Cambridge-based research arm of the Swiss drug giant.

In addition to the research collaboration, Novartis will make a multimillion dollar equity investment in Infinity -- essentially a bet on the future success of the three-year-old start-up.

The deal was hailed by one biotechnology financier as evidence of Novartis's impact since moving its worldwide research headquarters to Cambridge in 2003.

"This is the kind of collaboration they came to town for," said Peter Feinstein, managing director of BioVentures Investors, a life science venture capital firm in Cambridge. "Clearly Novartis is reaping the rewards of setting up shop in Kendall Square."

The Novartis research institutes are now based in the former New England Confectionary Co. building on Massachusetts Ave., about a mile and a half from Infinity's Memorial Drive headquarters behind the old Polaroid building.

At the heart of the collaboration is a two-year agreement under which Novartis will pay Infinity more than $10 million to jointly develop a collection of chemical compounds with potential to be used as drugs. In an innovative twist, both companies will have the right to independently develop the promising compounds.

Steven H. Holtzman, Infinity's chairman and chief executive, said the arrangement doesn't put the two companies on a collision course: Infinity is exclusively focused on developing cancer drugs, while Novartis is exploring many therapeutic opportunities.

Moreover, he said, "The molecules are just the starting point. They're never the actual drug that gets administered to patients."

Underlying the deal is a common theme throughout the pharmaceutical industry. Big drug companies are finding it difficult to fill their product development pipelines with their own discoveries. Increasingly, they are turning to small, innovative biotechs to help generate promising drug candidates.

"The unique chemistry capabilities at Infinity allow us to fill an industrywide need for creator chemical diversity so that new therapies can be discovered more reliably and predictably," said Julian Adams, Infinity's chief scientific officer.

Novartis is not the first industry giant to turn to Infinity. Last January, Amgen Inc. of Thousand Oaks, Calif., the world's largest biotech firm, made a $25 million investment in exchange for non-exclusive access to Infinity's huge library of unique compounds. In addition, a third pharmaceutical firm is expected to announce an investment in Infinity tomorrow, company officials said.

Infinity's unique strength is its ability to synthesize chemicals that mimic the complex, three-dimensional structure of proteins and other molecules found in nature. In theory, that makes Infinity's molecules more likely to have useful biological activity, an important prerequisite for a potential drug.

Novartis chemists will bring capabilities in developing compounds into actual drugs, with particular qualities for the way they are administered and metabolized inside the body.

"They have the ability to make complex natural-product-like molecules in a way that's easy to synthesize," said Scott Biller, head of global discovery chemistry for the Novartis research institutes. "We have a deeper understanding of what it takes to make a drug, with qualities like safety and efficacy."

Biller said there were few parameters narrowing the scope of the compounds the two teams will ultimately develop. "There really are no boundaries," he said. "We're designing a library of compounds that's intended to be active against a diverse set of targets."

Holtzman said the two firms began to work together through common ties: Infinity cofounder Stuart L. Schreiber, chairman of the Department of Chemistry and Chemical Biology at Harvard University, had long worked with Dr. Mark Fishman, the former Massachusetts General Hospital physician who now heads Novartis's research institute.

Infinity has come a long way in just over three years. The company raised $85 million in two rounds of venture capital funding in 2001 and 2002. Novartis's equity investment, along with the investment by Amgen and the third pharmaceutical firm, will constitute a third round of venture financing totaling $50 million.

Holtzman said Infinity's lead compound, IPI504, will begin human clinical trials in the first quarter of 2005 and will first be tested in patients suffering from multiple myeloma, the second-most common form of blood cancer.

As to the possibility of an initial public offering, Holtzman said he's in no rush. The company ended 2004 with $40 million on its balance sheet. He said he doesn't want to pursue an IPO until IPI504 shows it is effective in early clinical trials, and the company has several other promising drug candidates in its pipeline.

Jeffrey Krasner can be reached at krasner@globe.com.