Glaxo, Google Parent Create $715 Million Bioelectronic Medicines Venture

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GlaxoSmithKline PLC (London) and Google parent Alphabet Inc. (Mountain View CA) have teamed up to develop what they call bioelectronic medicines, or treatments that use miniature implanted electronic devices to modify how electrical impulses are transmitted around the nervous system.

The Wall Street Journal reported that Glaxo signed an agreement with Verily Life Sciences LLC, formerly Google Life Sciences, to create Galvani Bioelectronics. It said the pair would spend as much as £540 million ($714 million) over seven years on the venture, provided they succeeded in hitting various milestones along the way.

Glaxo will control 55% of the new company and Verily will hold the rest. Many biological processes are controlled by electrical signals transmitted from the nervous system to the body’s organs. Glaxo said early-stage research in its laboratories suggested that distortions of those signaling pathways were involved in several long-term diseases including diabetes, asthma and arthritis.

Galvani Bioelectronics would bring together Glaxo’s knowledge of drug discovery and development with Verily’s expertise in miniaturizing low-power electronics, data analytics and building software for clinical applications, Glaxo said.

Initial work would focus on developing miniature electronic devices to test out that concept in humans for the first time, Glaxo said. The treatment would likely work by attaching miniature electronic devices to individual nerves, said Moncef Slaoui, Glaxo’s head of vaccines and chairman of Galvani Bioelectronics.

“If successful, this approach offers the potential for a new therapeutic modality alongside traditional medicines and vaccines,” Mr. Slaoui said.

Several pharmaceutical companies have teamed up with Google’s parent to develop new digital approaches to medicine. Novartis AG (Basel CHE) is working with the tech company to develop a “smart contact lens” for diabetes patients that can monitor blood glucose levels in tears to treat the condition.

Sanofi SA (Paris)is also working with Google on new ways to monitor and treat diabetes. Kris Famm, who heads up bioelectronics research at Glaxo, will be president of the new company. Andrew Conrad, CEO of Verily, will sit on Galvani’s board. Galvani Bioelectronics will be based at Glaxo’s research center in Stevenage in the U.K., with a second research hub at Verily’s facilities in San Francisco, Glaxo said.

The U.K. government said the decision that the venture be based there demonstrated the “global appeal” of Britain’s scientific expertise, according to the WSJ. It is the second time Glaxo has announced a large investment in the U.K. since Britons voted to leave the European Union in a referendum in June. Last week, the company said it would spend £275 million to increase capacity at three of its U.K. factories, a decision CEO Andrew Witty said was made despite Britain’s Brexit vote.

Steve’s Take: The advance of Google and other tech firms into life sciences has given drug developers a new source of partners with complementary skills, but also raises a discomforting question: Long term, are these companies allies or rivals?

Are Google and other tech firms moving into life sciences allies or rivals to big pharma? Click To Tweet

For Roche Holding AG (Basel CHE) CEO Severin Schwan, the answer is still unclear. Japanese news service Nikkei recently put the sticky situation to Schwan in the most direct way possible, asking: “Google: Competitor or partner in the future?” Schwan is unsure. “I don’t know yet. We will see how things go,” he said.

The uncertainty hasn’t stopped Roche’s peers from hooking up with Google. As noted above, Roche’s cross-town rival Novartis AG has licensed “smart” contact lens technology from Google, while Sanofi has teamed up with the West Coast tech giant to collaborate on the application of miniaturized electronics to diabetes care.

While Schwan has doubts about the long-term intentions of Google and its kind, he is a believer in the value of pairing the IT skills of tech companies with the life science know-how of drug developers.

“IT companies have a lot of capabilities around digitizing and analyzing data. Also, in analyzing big data, they have the tools, the algorithms, etc. But what they miss is the medical knowledge, the understanding of biology. They can’t ask the right questions. They can program but they don’t know what to program,” Schwan said.

This is where Schwan sees Roche and its peers contributing. Schwan said Roche is “very open to those partnerships,” citing its alliance with Foundation Medicine Inc. (Cambridge MA), which he described as “really an information company”–as an example of its willingness to embrace tech. (He didn’t mention Roche’s $1.03 billion investment in Foundation last year for a majority stake.)

The Swiss drugmaker’s CEO has first-hand experience of how such alliances can sour, though. Schwan was at the helm of Roche when the decision was made to pull the plug on a collaboration with IBM, which was working with it on the creation of a nanopore-based sequencing platform until 2013.

These IT giants are strange bedfellows to be sure. But Google, Apple and IBM-Watson see massive gains to be gotten in deals with big pharma. I especially favor Google and Apple (and not because they are my California neighbors) because they are so nimble and prescient spotting trends that portend high dividends.

I wouldn’t bet against them in holding their own with stodgy-ish pharma. They all have to grow, and with boomers like me crashing the ER gates with our wearying bodies, healthcare is set to keep growing for the foreseeable future.