Stemcentrx, a startup withbackingfrom Silicon Valley investors including Artis Ventures and Founders Fund, was just acquired by AbbVie for $5.8 billion in cash and stock.But the startup's investors could get up to $4 billion more if Stemcentrx hits successful milestones for clinical developments.The company has been quietly working since 2008 but it launched publicly in September 2015. It was founded by Brian Slingerland, formerly a VP of Goldman Sachs and cofounder of Qatalyst Partners,and Scott Dylla, who was a senior scientist at OncoMed Pharmaceuticals.Stemcentrxis in clinicaltrials ofdrugs designed totreat cancer by targeting cancerstem cells. Unlike general adult stem cells that are found all over the body as unspecified cells that are good at regenerating, cancer stem cells are a specific type of cancer cell that some research suggests couldplay a keyrole in defeating the disease.The Stemcentrx drug that's farthest along thus far iscalled rovalpitzumab tesirine, or Rova-T. It's currently in phase 1 trials to treat small cell lung cancer, a type of lung cancer that makes up about 10-15% of all cases.More data on Rova-T is expected to be presented in June, which will look more at the efficacy of the drug. AbbVie will give Stemcentrx up to $4 billion in milestone payments based on how the development of the drug goes.Rova-TThe targeted drug goes after a special protein that may be linkedto cancer stem cells.The protein, called DLL3, is highly expressed (meaning a genetic variation is telling the body to make a lot of it)in 70% of tumors, according to the drug's lead investigatorCatherine Pietanza. Ideally, Rova-T wouldlatch onto the protein, deliver the deadly toxin to the celland cut off the tumor growth at its source.In September 2015, Stemcentrx presented its first clinical trial dataof the drug in 79 people who'd previously been treated for small cell lung cancer. The purpose of the trial was to show the safety of the drug by increasing the dosage until it becomes too toxic for the body. Of the 79 participants,33 showedhigh amounts of the DLL3 protein in their tumors. That's a good sign; theresearchers hoped those with high levels of the protein would havebetter success with the drug. Out of that group of 33, ten sawtumorshrinkage, something the trial defined as "a partial response" to the drug. Foranother nine people, no change intumor size was observed.The drug's side effects were similar to those of other chemotherapies, and included things like fatigue and nausea. Another side effect some patients experienced was sensitivity to light. Still others experienced a condition called pleural effusion, where fluid builds up between the lungs and the chest. Compared to Topotecan, another drug that's used in small cell lung cancer patients where the first round of treatment has failed, the DLL3-targeting drug had a better rate of keeping the tumors from growing, in some cases even shrinking the tumor. "DLL3 may be the first predictive biomarker associated with drug response in small cell lung cancer," Pietanza said in the presentation.The cancer stem cell theoryThe idea of targeting cancer stem cells isn't new.For example, OncoMed (where Stemcentrx's CSO Scott Dylla started out) has seven such drugsin clinical trials, a few of which have hid some rough patches in the past few years as they make their way through the trial process.Verastem, another company targeting cancer stem cells, stopped their phase 2 clinical trial in September 2015after their cancer drug wasn't effective enough on its own. Cancer is inherently complex, and there is some evidence that suggests that it's not just cancer stem cells that spread cancer, but rather any cancer cell in the body.There is a major debate that is still going on and I dont know if its going to be resolved so easily, Ravi Majeti, a Stanford biologist told MIT Technology Review in September 2015. Its a complicated story, and I would say the cancer-stem-cell theory is waning a little bit."Tech mentalities hitting the biotech worldBefore the acquisition, Stemcentrx was valued at $5 billion. Unicorns, or companies at a valuation above $1 billion, at this early stage of clinical development are historically rare in biotech, with the exception of Theranos and its $9 billion valuation while still managing not to share its data publicly. Other highly valued biotech startups keep cropping up, with Samumed (another company looking at stem cells, though in a regenerative sense) at $12 billion, according to Forbes.The traditional delay in high valuations isinfor the most part because a drug has to prove that it works through vigorous clinical trials, which is no small cost and often falls short on the outcomes it needs to actually get approved. But Stuart Peterson, a founder of Artis Ventures which initially funded Stemcentrx back in 2011, told Business Insider that this is where Silicon Valley investors are starting to look. "Theres a tsunami brewing," he said. "[Cancer] is a big problem thats meaningful for us on a global basis. This is where we should be focused."And the company appears to have lofty goals for the outcomes it expects to get from theirdrugs."Our mission, which is similar to the mission of many other companies, is to cure or significantly impact survival for cancer patients," Scott Dyllatold TheStem Cell Podcast in December 2015.Venture capital firms are eyeing the M&A that's the bread and butter of pharma companies looking to build up their pipeline. For example, pharma giant AstraZeneca picked up a $4 billion stake in Acerta, a relatively small cancer drug. These deals happen all the time, and in the frenzy of M&A, things are getting earlier and earlier stage. Stemcentrx's own$5 billion valuation came from biopharmaceutical company AbbVie's acquisition of Pharmacyclicsa cancer drug developer that has since seen one of its drugs get approvedfor $21 billion.NEXT:A cancer startup just raised $175 million from a pharmaceutical giant, and it could be where the industry is headedSEE ALSO:We're on the verge of seeing cancer in a drastically different lightJoin the conversation about this storyNOW WATCH: Humans are finally starting to understand the octopus, and it's mind-boggling
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