Nimbus Therapeutics, the biotechnology company that just signed one of the most lucrative deals for an unapproved drug in industry history, started out as an experiment in financial engineering.
In 2009, at the height of a global recession, public investors backed away from biotech, eliminating a key source of funding. So Atlas Venture partner Bruce Booth and Ramy Farid, the head of drug discovery firm Schrodinger, tried something unorthodox.
Their plan had three parts. They formed a company that could use Schrodinger’s computing tools, and they set it up without any labs, relying instead on contractors to keep costs down. And they structured their startup as a limited liability company, with subsidiaries each owning separate programs. Its name: “Project Troubled Water.”
More than a decade later, their experiment, Nimbus, has become one of the sector’s most successful privately held companies. On Dec. 13, it sold its lead program, an anti-inflammatory drug that blocks a protein called TYK2, to Takeda for $4 billion in guaranteed cash and as much as $2 billion more.
Nimbus did something similar, but on a smaller scale in 2016, when it sold a liver disease medicine to Gilead. Prior to the Takeda deal, Nimbus says it has paid its investors $600 million in dividends, well more than the $423 million they’ve put in.
Nimbus’ work might still not lead to approved medicines, or the kind of top-selling products Takeda and Gilead envision. And Nimbus is now joined companies like Roivant Sciences, BridgeBio Pharma and PureTech that have “hub-and-spoke” models of their own, making its structure less of the novelty that it once was.
But, unlike those others, Nimbus remains private and has chosen to hold onto individual programs, rather than spin them out into separate companies. It has proven it can survive, and now has a sizable bank balance at a time when many of its peers are cutting costs.
“We want to build a great R&D organization that is around for not just 13 or 14 years, but 30 years,” said Jeb Keiper, a former GSK executive and Nimbus’ CEO since 2018.
Biopharma Dive spoke with Keiper about how Nimbus was built, the reasons behind its deal with Takeda and what’s coming next. The following conversation has been lightly edited and condensed for clarity.
BIOPHARMA DIVE: With $4 billion coming, how do you decide how much goes to your investors, versus funding new research?
JEB KEIPER: We are not a bank. We're not going to hold $4 billion on the balance sheet and try to get good savings account returns on it. We absolutely intend to make returns to investors. What we think about, though, is for the rest of the pipeline: What's the proper level of funding and financing for that and how do we want to achieve that?
It's great to see of course. We celebrated and raised a glass, made a toast, but it was back to work as well. And that was the same thing that happened after the Gilead deal.
Did you always intend to sell the TYK2 drug at a certain point in development?
KEIPER: We don't have a pre-specified exit point. I'm a firm believer that assets are bought, not sold.
We were fortunate to be in a position where we got some great data — we haven’t disclosed that publicly other than to say our trial was successful, we’ll be disclosing it in the future — but I think it’ll knit things together in people's minds.
Was anyone else involved in the bidding?
KEIPER: This was a competitive process. There were lots of parties interested, and I think Takeda is absolutely the best [one] there. They're so committed to this.
Everybody always asks me, ‘Well, was this the biggest check? I can’t comment on that, other than to say it is a multivariate discussion, not just a ‘what are the dollar signs?’ [decision].
Looking back at your history, why wasn’t Nimbus formed as a C corporation as many biotechs are?
KEIPER: That really came out of the Great Recession. The market collapsed, so the idea was to use some financial engineering: ‘Let's think about ways we could better manage risk within an organization in a portfolio.’
We adapted an LLC structure to a company where all the intellectual property for an individual program was housed in its own wholly owned subsidiary. That would create a wide degree of flexibility for collaborations and partnering, and allow something like what just happened with Takeda or back in 2016 with Gilead. They can acquire all of the intellectual property without having to make anybody redundant or do anything on the personnel side.
What makes it easier to do deals this way?
KEIPER: My background has been as the person buying these companies, and anytime we would go and buy a company, we would buy it for the lead asset and really wouldn't care about anything else that was inside of it. The LLC structure allows an organization to come in and say, ‘Well, I really want your TYK2 program and I don't have to buy all of Nimbus.’
I point that out because there are different tastes for different times. Back when Gilead bought our [liver disease] program, we had our TYK2 program and they weren't interested in it. It wasn't interesting, really, to anybody at that time except us.
What are the tradeoffs?
KEIPER: This works incredibly well in a model where all of the intellectual property [in each program] is distinct from one another, but not where there’s a core piece that gets shared. For all of these biotech companies that are using true novel modalities, it’s just not a good piece. I sit on these boards, I understand these companies. They’d call me and say, ‘Should I use an LLC structure?’ And I'm like, no, you really can't, because you can’t get a clean separation of that subsidiary entity without some intellectual property from the whole.
At the end of the day, our products are small molecules, which are very reproducible and don't need any enabling technology other than their own invention. That makes them perfect for packaging up in an LLC.
How does this framework affect your view of the public markets?
KEIPER: Investors can make returns. We've paid dividends. We've given returns out. The industry probably got a little bit carried away with going public to get returns. I've always viewed going public as a financing event. I know people celebrate those things. They have parties, ring the bells and all that sort of stuff.
But at the end of the day, it's a financing event. It's like having a party when you go to the bank and ask for a mortgage.
Since Nimbus formed, ‘hub-and-spoke’ concepts, with subsidiaries tethered to a parent company, have proliferated in biotech. What makes you different?
KEIPER: It’s not as unusual as it was in 2009. But we've stayed private and used an LLC, rather than organize as a C Corporation and go public.
We’ve also made a very conscious choice of not allowing differential investment in our subsidiaries. I’ve been asked over the years many times by investors, ‘Hey, we love your xyz program, can we invest in that?’ And my answer is: ‘No, if you're interested, you can invest in Nimbus. You can invest in this pipeline of programs, the management team, and the structure.’
The other piece is we don't assign individuals rewards or specificity to an individual subsidiary. We’ve had attrition, had some programs fail, but we're not tying individual awards or motivations to that.
Why didn’t Nimbus go public over the last few years? You had an advanced TYK2 program at a time when it became a hot investment.
KEIPER: Most importantly, we [started working on] a TYK2 program when it was not hot. We've been working on that program for a decade. A lot of other companies — the Ventyx [Biosciences] and Alumis’ of the world — started in 2018 after Bristol Myers Squibb’s Phase 2b [data] and said, ‘Oh TYK2 is a great target, we’ll come out and do the same thing.’
It feels like it's a fait accompli: Go public, because all biotechs go public. Going public is a financing event. So the answer to ‘Should we go public?’ is, do we need the capital from the public markets? Is there some type of investor or capital amount that’s needed? Because if the reason is to attract great talent, board and investors, we've found ways of doing that as a private company.
I never say never. I absolutely have thought about being public multiple times in our history, and it came down to: Is that the right source of capital? Are those the right set of investors that we want to go after?
You had an opportunity with TYK2 to try to become a different type of company and market your own medicines. Why sell it instead?
KEIPER: We want to build a great R&D organization that is around for not just 13 or 14 years, but 30 years. We know what we're good at. Commercializing TYK2 would have made no sense for us. We don’t need to be public. We don’t need to have our name on the side of a building, because to commercialize that requires a multinational that can do that incredibly well, that has a pipeline to actually get market access.
Our program is going to need to compete with Bristol Myers’ [Sotyktu], with Amgen’s Otezla, so it's going to need first-line market access position to do that. The only way you'll do that in the United States is if you have other products in a portfolio.
What’s next once you close this deal?
KEIPER: We’re back working on the rest of the pipeline, and folks will probably not pay attention to us. But with any luck, in a few years, we may have another headline and people will go ‘oh my gosh, what does that company keep doing?’