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March 14, 2016 By Mark Terry , BioSpace.com Breaking News Staff South San Francisco-based Stemcentrx, Inc. is reportedly exploring a sale or other strategic options. The company has teamed with Morgan Stanley to field offers, and has apparently already received first-round bids earlier this month. In September 2015, Stemcentrx emerged from stealth mode, completing a financing round worth almost $250 million. This resulted in a valuation of about $5 billion. Investors included Artis Ventures and Founders Fund . Founders Fund was founded by Peter Thiel , who is noted for being the co-founder of PayPal Inc. , and being an early investor in Facebook . Stemcentrx is focused on developing therapies that target cancer stem cells. Cancer stem cells are believed to be tumor cells that metastasize into cancer, and the company hoped that by targeting and killing those cancer stem cells, their drugs would enable long-term patient survival. One of the company’s products targets DLL3, related to small-cell lung cancer. It utilizes an antibody to target a lethal drug on the target. A paper published in Science Translational Medicine in August 2015, found that the company’s compound “induced durable tumor regression in vivo across multiple PDX models …” and as a result was a “promising first-in-class antibody-drug conjugate (ADC) for the treatment of high-grade pulmonary neuroendocrine tumors.” An Editor’s Summary noted that, “Unlike chemotherapy, the anti-DLL3 treatment appeared to be particularly effective against tumor-initiating cells, which may account for its efficacy.” Stemcentrx has five compounds in clinical trials. Three of those trials, according to statements made in 2015, have delivered measurable responses in cancer patient trials. The lead drug is rovalpituzumab tesirine, in Phase II trials for small-cell lung cancer. SC-002 is in a Phase Ia trial for the same indication. SC-003 is in Phase Ia for ovarian cancer. The company also has two products that are partnered therapies with Pfizer (PFE) products in solid tumors, both in Phase I studies. In addition to a sale, Stemcentrx is considering an initial public offering (IPO) or partnership deals. Of particular interest is whether any sort of deal conducted now or later this year would hit the company’s previous $5 billion valuation, given an overall industry-wide valuation drop. Damian Garde , writing for FierceBiotech, points out that many of the investors in the company typically only participate in so-called mezzanine rounds, which occur just prior to an IPO. Other investors have included Sequoia Capital , Elon Musk , Artis Ventures and Fidelity . It’s worth pointing out that the concept that Stemcentrx is built on, that cancer isn’t caused by normal cells that malfunction, but is caused by rare cancer stem cells, isn’t universally accepted . “There is a major debate that is still going on and I don’t know if it’s going to be resolved so easily,” said Ravi Majeti, a biologist at Stanford University , told Technology Review. “It’s a complicated story, and I would say the cancer-stem-cell theory is waning a little bit.” The company, despite the occasional news sighting like today’s Wall Street Journal article , still seems to operate in stealth mode with no published press releases and a bare-bones website. Apparently it operates on three floors of a building in San Francisco overlooking the Genentech campus, and has about 140 employees. Its approach has been on performing xenografts—taking biopsied human cancers and implanting them into mice whose immune systems have been destroyed. Once the cancer grows, cancer cells are collected and sorted into unique cell types, then each cell type is implanted into other mice. This laborious process is a way of trying to find the rare stem cell that originates the cancer. In addition to identifying the cancer stem cell, they also are attempting to identify a specific biomarker associated with it, which was how they identified DLL3.