Monday, April 21, 2008

Stromedix Gets $25 Million in Fibrosis Fight

When Michael Gilman, PhD, left his post as EVP of research at Biogen Idec Inc. in late 2005, his goal was to start afresh. He quickly hooked up with Atlas Venture and Frazier Health Care Ventures, the latter through a friend and venture partner at Frazier, Michael Gallatin, PhD. Two years later he was in the thick of his first start-up experience with a Phase I-ready monoclonal antibody to treat fibrosis.

Today that company, Stromedix Inc., announced it has raised $25 million in a Series B led by New Leaf Venture Partners, with participation from Bessemer Venture Partners, Red Abbey Venture Partners, and A-rounders Atlas and Frazier. Stromedix has already begun Phase I studies with its monoclonal antibody, licensed from an unexpected source, Biogen Idec. The Mab targets integrin alpha-v-beta-6, a cell-surface adhesion molecule and activator of transforming growth factor beta, itself a popular target in a variety of indications including fibrosis and oncology. According to Gilman, TGFb is “necessary and sufficient” in the fibrotic process.

Gilman took a few minutes to explain to us how Stromedix got from A to B, and to talk about why fibrosis has received scant industry attention despite its prevalence and well-understood pathways and potential blockbuster markets.

Fibrosis occurs when the body’s typically well-choreographed response to injury either goes haywire or cycles at low levels for long enough that scar tissue accumulates in the affected organs. Function is generally lost, eventually organs fail. “It’s a condition that has been fundamentally missed by the industry. There are no approved antifibrotic drugs and very few in development” despite the condition’s well understood biology, says Gilman.

The reason? Nobody has figured out how to successfully design and run a clinical plan for an antifibrotic drug. “There’s a generalized anxiety about how hard that clinical path is,” says Gilman.

And that, in a nutshell, is Stromedix’s proposition. Gilman, co-founder Gallatin and their small team reckon they have figured out how to do the right clinical experiment to determine that the biology that has been laid out preclinically actually holds up in humans.

So far researchers have stumbled for three fundamental reasons. First, in most instances fibrosis develops slowly, over a long period of time, making clinical study unwieldy. Second, by the time many patients present with disease they’re too far gone for a therapeutic intervention to make much of a difference. Finally fibrosis is a tissue level phenomenon, says Gilman. “There is nothing in the blood you can measure, so you need tissue from patients, and that means biopsies,” he says.

Stromedix believes the population in which to secure proof-of-concept for STX-100 is transplant patients. “You need patients who you can get early, perhaps even in advance of fibrosis, who develop disease quickly, and patients from whom you can get tissue,” he explains. A transplanted kidney, for example, goes in clean—no fibrosis—but is quickly subject to all kinds of drug- and immune system-induced injury, and so it develops fibrosis quickly; transplanted organs are also routinely biopsied. “It’s the perfect setting to test an anti-fibrotic drug,” says Gilman.

There was just one problem: Gilman and Gallatin didn’t have an anti-fibrotic drug.

But Gilman did know of a program inside Biogen that might fit the bill. Unfortunately, it was off limits because the Big Biotech was actively developing the compound for , idiopathic pulmonary fibrosis (IPF). But Biogen doesn’t have a pulmonary business and the thought of spending big on a non-core asset likely didn’t sit well. About eight months after Stromedix was began drug-hunting, Biogen shelved the program—despite its strong preclinical data--as part of a portfolio re-organization. “I called my friends over at Biogen and said ‘why don’t you let us have it?’” said Gilman.

In March 2007, Stromedix raised $4.4 million from Atlas and Frazier and finalized the STX-100 license two months later. The Mab arrived with a complete preclinical tox package, manufactured clinical material, and an IND on file at FDA. “The program came out very nicely baked,” says Gilman. “And within 90 days we were in front of the FDA with a new clinical plan in renal transplant.” Stromedix filed a new IND in October and in early 2008 started a Phase I in healthy volunteers, which should wrap toward the end of the year.

STX-100 is a poster-drug for the out-licensing movement. Biogen Idec had to take it into a much bigger market—IPF, which some analysts predict could be worth upwards of $6.5 billion (with a B) per year—in order to see enough of a return on its investment.

The economics are completely different for a small firm like Stromedix, which can monetize its investment with a well-run proof-of-concept trial in a small indication that might not even be the final clinical destination for the product.

Of course Biogen stands to gain as well—the company owns an undisclosed stake in Stromedix. Although it has no specific rights to the project down the road, Gilman acknowledges his former employer is well-placed should it decide to license the project back after POC. Provided it stays focused, today’s B round should see Stromedix through that proof-of-concept in renal transplant, which should read out in 2010.

Gilman is positively evangelical about putting Big Biotech and Big Pharma assets into the hands of small, focused firms with incentivized management. But whether or not Stromedix pursues further in-licensing opportunities is uncertain. At the moment the company is a clean, capital-efficient play on a well-regarded program that is perfectly situated on the verge of a valuation inflection point, says Gilman. In other words, given proof-of-concept success, why complicate the prospects of a takeover?

(A full version of this article will run in the May issue of START-UP)

image of fibrotic lung via Wikimedia Commons.

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