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Atlas Venture, Bill Gates co-invest in Nimbus, Cambridge-based company applying new software to drug discovery

Posted by Scott Kirsner  March 10, 2011 07:45 AM

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I'd been hearing buzz lately that Atlas Venture, newly ensconced in East Cambridge, had been inviting an increasing number of entrepreneurs to cultivate new companies in their offices, with the goal of making small seed investments if their ideas started to click.

"We're doing much more seed these days than we did in the past decade," Atlas partner Jean-Francois Formela told me last week.

Today, one of the start-ups that has been percolating in the Atlas offices, Nimbus Discovery, is announcing that Bill Gates is putting some money in, joining a seed round that began last year with $3.5 million from Atlas and Schrödinger, a New York company that sells software that scientists use to design drugs.

Nimbus will be using customized software developed by Schrödinger to develop new drugs that will take aim at notoriously tough-to-hit biological "targets." Nimbus says it is initially working on drugs that could be effective against lymphoma, inflammatory disease, and obesity. While Nimbus is still relatively small, its management team includes Rosana Kapeller, a co-founder of Aileron Therapeutics and Jonathan Montagu, a veteran of Concert Pharmaceuticals. (Here's a blog post about Nimbus, by Atlas partner and Nimbus chairman Bruce Booth.)

Formela tells me that there are two other seed-stage life sciences companies that Atlas is involved with, one of which is "working on the next generation of RNA interference," he says. (He says that Atlas is currently seeding far more technology start-ups — at least a dozen — than life sciences companies.)

Also keeping the crew at Atlas busy is a new project called Atlas Venture Development Corp. Led by David Grayzel, formerly an executive at Infinity Pharmaceuticals, it's a way for Atlas to "adopt" certain products that may have been set aside by companies — perhaps because they don't seem to be making enough progress, or because of a corporate shift in strategy — and develop them using a network of contractors. Formela likens the approach to "cloud computing" in that Atlas won't necessarily set up wet labs and hire scientists to move the products forward, but will outsource almost everything.

"We're seeing that most of the pharmaceutical pipeline is valued at zero," Formela says. "Pharma companies are valued almost entirely on their cash flows, so they have to trim down the resources they put into early-stage development." AVDC, he says, will try to bring speed and nimbleness to developing individual drugs, and "apply the venture model."

AVDC got its start last June. Grayzel's job will be to "look at a bunch of molecules, pick the ones we think we can add value to, and bring a virtual team together around them, using [contract research organizations] and other vendors, and sometimes even using the pharmaceutical company as a service entity, paying the cost," Formela says.

"We're looking all over for assets," Grayzel says. "Half probably is within big pharma, and some from large and mid-cap biotech, and some from small biotech and academia. We're agnostic as to the therapeutic area, and it could be a biologic or a small molecule drug."

If a drug under development shows promise in clinical trials, it might be "re-adopted" by the original owner (with Atlas getting a piece of the upside), or perhaps be licensed to another company, with Atlas and the original owner getting a share of royalties or a check from an outright purchase.

Atlas says it will invest about $15 million in AVDC (some of the money may be supplied by other investors), with a goal of working on 8 to 12 new products. Grayzel says they hope to have the first AVDC product in development later this spring.

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Scott Kirsner was part of the team that launched Boston.com in 1995, and has been writing a column for the Globe since 2000. His work has also appeared in Wired, Fast Company, The New York Times, BusinessWeek, Newsweek, and Variety. Scott is also the author of the books "Fans, Friends & Followers" and "Inventing the Movies," was the editor of "The Convergence Guide: Life Sciences in New England," and was a contributor to "The Good City: Writers Explore 21st Century Boston." Scott also helps organize several local events on entrepreneurship, including the Nantucket Conference and Future Forward. Here's some background on how Scott decides what to cover, and how to pitch him a story idea.

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