It's too soon to say who the ultimate winners will be.
The field is so new that business models are still evolving.
Indeed, much of the work is being done by academic
researchers who are only beginning to think about
commercializing their ideas. Most companies are taking a
product-focused approach, developing therapies that,
depending on the market size, can be out-licensed to hungry
pharma companies or kept in-house through the
commercialization phase. Two early leaders, FoldRx and
Amicus, are taking the latter approach, developing their
molecular chaperones first in orphan diseases where small
clinical trials and an unmet medical need make it possible
for a start-up to get to market quickly while retaining 100%
of the commercial upside. In addition, the potential to hit
a broad array of diseases—especially disorders with large
patient populations such as Alzheimer's disease or
Parkinson's disease—is also fueling investor interest.
But the field has its share of skeptics as well. An
R&D executive at a competing biotech calls the approach
"intriguing," but wonders whether it will translate into a
potent medicine. Identifying the proper dose to give
patients won't be trivial he claims. And finding patients
who actually respond to the drug—especially in some of the
rarer disorders—could be difficult as well.
Still, in the last year, pharma companies have shown an
increased willingness to bet with their wallets on
relatively unproven concepts such as next-generation
antibodies and RNA interference. Two early deals may reflect
pharma's changing outlook of the technology: in August, Biogen
Idec Inc.
licensed a small-molecule therapy
for amyotrophic lateral sclerosis from Canadian biotech Amorfix
Life Sciences Ltd.
in a deal potentially
worth more than $25 million[200620536];
in early December, Genentech
Inc.
signed an agreement worth up to $300
million with AC
Immune SA
to develop the Swiss biotech's
Alzheimer's treatment. [200620780]
Certainly, on the VC side "there's a rush to lock up access
to these technologies," says Daphne Zohar, general partner
with PureTech Ventures and Satori backer. "Once one or two
deals happen, it's almost too late to get into the field,"
she says.
A complex Process, a Novel Target
There are as many as 100,000 different proteins in the
human body. To work correctly, these molecules must undergo
a poorly understood act of molecular origami that depends
both on the primary amino acid sequence and the cellular
milieu where the folding occurs. In plants and animals,
proteins destined to be secreted or embedded in the membrane
are folded in a specialized compartment called the
endoplasmic reticulum (ER), where a thick soup of sugars,
enzymes, and nascent polypeptides promotes some
three-dimensional structures and inhibits others.
But inevitably mistakes happen. To guard against the
release of toxic molecules, the cell has evolved
sophisticated quality-control mechanisms that flag misfolded
proteins before they escape the ER, much the way a factory
worker would remove a car with a dented bumper before it
leaves the assembly line. Misshapen molecules are tagged
with a specialized protein called ubiquitin and then
rerouted from their original cellular destination to the
proteasome complex, the cell's garbage disposal. In some
cases, a cell's QC system is unable to eliminate all the
aberrantly shaped proteins following their synthesis. That's
when disease strikes.
Protein misfolding can trigger disease by two very
different mechanisms, described as loss of function defects
or aggregation defects. In the first case, misshapen
proteins get trapped in the ER where they are unable to
perform their normal biological function. For example, say
there is a missense mutation in the a-galactosidase A
(alpha-GAL) gene, which results in a misfolded enzyme that
accumulates in the ER. The molecule is rapidly degraded
before it has a chance to travel to the lysosome—its normal
destination--where it would [deleted to avoid 'normal' and
'normally' in same sentence]break down a complex lipid
called globotriaosylceramide (GL-3). As a result, GL-3
levels in the cells build up to dangerous levels, causing a
variety of symptoms ranging from debilitating pain to kidney
failure to an increased risk of heart attack that are now
classified as Fabry's disease.
Normally, misfolded proteins are rapidly cleared by the
cellular housekeeping system. But in the case of aggregation
defects, the misfolded proteins accumulate so quickly, they
overload the proteasome degredation pathway. As a result,
toxic intermediates that form a tangled ball of gunk build
up and disrupt cellular function. These poisonous aggregates
are the hallmarks of neurodegenerative conditions such as
Alzheimer's and Parkinson's disease. They are also
characteristic of rare disorders such as familial amyloid
polyneuropathy, a fatal disease caused by the accumulation
of amyloid fibrils in the peripheral nerves.
One potential way to treat diseases caused by protein
misfolding is to ramp up QC to clear the toxic species more
quickly. But that strategy wouldn't work in cases where a
loss of protein function results in disease. And, there's a
chance such a generalized approach could come with nasty
side effects. A better approach, say most researchers, is to
develop so-called molecular chaperones--small molecules that
easily cross the intracellular membrane and coax misfolded
proteins back into their correct, biologically active
conformations or prevent crumpled species from clumping
together in the first place. (See Exhibit 3.)
It's a fundamentally different way of looking at disease.
Historically, companies have treated diseases arising from
defective proteins either by attempting to fix the actual
coding region via gene therapy or by giving patients
authentic replacement proteins. But the technical challenges
associated with gene therapy are huge, and there have been
no successes in the clinic despite decades of trying. In
addition, concerns about the overall safety of the delivery
vectors have dogged the field since 1999 when a teenager
named Jesse Gelsinger died from an immune reaction while
participating in a gene therapy trial.
Enzyme replacement therapies, meanwhile, have proved
phenomenally successful for biotechnology companies such as
Genzyme
Corp.
and BioMarin
Pharmaceutical Inc.
despite relatively
miniscule patient populations. Last year sales of
imiglucerase (Cerezyme) and agalsidase
(Fabrazyme), two ERTs developed by Genzyme to treat
Gaucher's and Fabry's disease, respectively, totaled more
than $1 billion. But enzyme replacements aren't perfect
drugs either. Because they are large molecules, replacement
enzymes cannot be taken orally but must instead be injected.
And they must be manufactured in cell-based systems that are
both expensive to create and to maintain, which drives up
the price tag. Furthermore, because cells don't take up
extracellular enzymes very efficiently, whopping doses of
the drugs must sometimes be given to have an effect. "ERT
has provided tremendous therapeutic benefit, but there's a
clear need for an alternative that improves or enhances upon
it," says Barkas.
Replacing Enzyme Replacement
Investors such as Barkas are betting that small-molecule
chaperones will ultimately prove superior to both gene
therapy and enzyme replacement. The company furthest
along—and with the most cash on hand—is Amicus, a New
Jersey-based company developing small-molecule drugs to
treat the same lysosomal storage diseases (LSDs) as
Genzyme's ERTs. The company currently has three
clinical-stage compounds: the lead product, migalastat
(Amigal), which treats Fabry's disease, is in Phase
II clinical trials; AT2101 for Gaucher's disease will soon
begin Phase II trials; and AT2220 for Pompe's disease is
expected to enter the clinic early next year.
Amicus' chaperone drugs work by a unique mechanism: they
are inhibitors that can boost cellular enzymatic activity.
Amigal, for instance, actually blocks the enzymatic
activity of its target, alpha-GAL, by binding specifically
to the protein's active site. That's not a problem, says
David Lockhart, PhD, the company's CSO, because the binding
event occurs in the ER where the protein is inactive anyway.
More importantly, when Amigal binds to alpha-GAL it
helps the enzyme to adopt a normal, stable conformation so
that it can exit the ER and be shuttled to the lysosome.
Once in the lysosome, the so-called pharmacological
chaperone diffuses away from the enzyme, freeing alpha-GAL
up to do its job.
The company's counterintuitive approach appealed to P.
Sherrill Neff, a managing partner with Quaker BioVentures.
"It's a totally different way of thinking about what is a
target and what is a hit. Current drug screens aren't
designed to pick up these kinds of molecules," he says. But
what really sold Neff on the company was the data from the
Phase I study in 12 healthy volunteers. In that study,
designed to assess safety rather than efficacy, the company
showed it could actually boost normal alpha-GAL activity
significantly. "I'd never seen anything like it," recalls
Neff. His firm was eager to back the start-up, and it put up
cash for both the company's $55 million Series C in 2005 [200530414]
and its $60 million Series D this past September. [200630497]
Preliminary results from Phase II studies of Amigal
are building on the promise of the initial safety trial.
Analysis of the data from the four patients with Fabry's
disease showed that after six weeks of treatment with
Amigal, a-GAL activity increased an average of
fivefold in patients' white blood cells. After another six
weeks of treatment, enzyme levels were still higher than
before treatment. The company expects to conclude the Phase
II trial and start a Phase III study in early 2007.
The promising clinical trials data weren't the only
reason investors such as Quaker BioVentures' Neff were
willing to pony up so much cash. Amicus has been able to
recruit a top-notch management team. Shortly after
concluding the Series B, the company hired John Crowley,
previously at Novazyme (a LSD company bought by Genzyme in
2001 for $137 million [200110174]),
to become the company's CEO. This charismatic man is well
versed in biotech drug development. Perhaps more important,
he has a deeply personal interest in getting LSD therapies
to market: two of his children are afflicted with Pompe's
disease. Crowley recruited other key people, including COO
Matthew Patterson, who spent 11 years developing drugs for
LSDs, first at Genzyme and then at BioMarin, and CSO
Lockhart, whose resume includes stints at the Whitehead
Institute for Biomedical Research
, Affymetrix
Inc.
, and Ambit
Biosciences Corp.
Late last year Lockhart was
fishing around for a new start-up to join when Barkas
suggested he talk to Crowley. Amicus' approach "was one of
the most compelling ideas I had ever heard of. It was
certainly far more compelling than anything I was
considering at the time," he recalls.
The company's decision to initially focus on orphan
diseases was also a factor for many VCs. Despite their
relatively small markets, developing drugs for LSDs gives
Amicus some powerful advantages on the business-side
including smaller, more rapid clinical trials and an FDA
more willing to tolerate the risks intrinsic to a
first-in-class medicine such as Amigal. In addition,
Amicus should be able to push its lead product through the
commercialization and marketing phases with its own
resources. "As an investor, that's pretty big," says Neff.
"We can get all the way home without giving up a significant
part of the upside to a development partner," he says.
Two Wrongs Make a Right
Ed Hurwitz, former SVP and CFO of Affymetrix and director
of Alta Partners is also a fan of developing novel
therapeutics for orphan diseases. His firm led the $43
million Series B financing round of Amicus competitor,
FoldRx this past May. [200630309]
"We believe that drugs for orphan indications that really
deliver on their clinical promise turn out to be quite
lucrative for small start-ups such as FoldRx," he says.
Another FoldRx believer is Fred Cohen, MD, PhD, a partner at
Texas Pacific Group. Because of the complexity of the
science, we sat on the sidelines and watched these companies
get going before making an investment," admits Cohen.
Ultimately, his group invested in FoldRx because it thought
the company had good evidence that its lead compound
actually worked as intended.
Like Amicus, FoldRx is developing its small-molecule
drugs first in orphan diseases. The company recently
licensed a yeast-cell-based high-throughput screen developed
at Massachusetts
Institute of Technology
by Susan Lindquist,
PhD, that should allow the company to rapidly identify small
molecules that restore folding. For now, though, the company
is focused on developing therapies to treat a family of
amyloidosis disorders caused by the accumulation of
deleterious aggregates of misfolded transthyretin, a
mutation-prone hormone-carrying protein produced in the
liver.
The company's lead product is based on research by
Jeffrey Kelly, PhD, a preeminent biochemist at Scripps
Research Institute
, who started studying the
folding of transthyretin back in the 1980s. One of the
dozens of different mutations that can impinge on normal
transthyretin folding causes the protein to accumulate in
the peripheral nerves, resulting in neuropathy. Researchers
elsewhere discovered a family that carried this mutation but
showed no signs of disease. Additional testing showed that
these individuals had a second, compensatory mutation that
restored normal transthyretin folding. It was an "aha"
moment for Kelly: "I thought, 'what if we could develop a
small molecule that mimics the accidental mutation?'"
In the ensuing years, his group has identified or
synthesized more than 500 small molecules belonging to six
structurally different families that do just that. Among the
compounds: genistein, a soy extract, and diflusinal
(Dolobid), an FDA-approved anti-inflammatory. FoldRx
screened and profiled these different compound families to
identify a clinical candidate, Fx-1006A, which is being
developed for the treatment of familial amyloid
polyneuropathy (FAP).
So far, the data look promising. When the FoldRx molecule
is added to plasma taken from FAP patients, it stabilizes
the transthyretin protein, preventing its misfolding and
amyloid aggregation in tissues. The company plans to launch
a multi-site, international Phase II/III trial in roughly
two dozen patients in the near future. FoldRx also hopes to
test the drug in patients with a related but distinct
disorder called familial amyloid cardiomyopathy that may
affect as many as 4% of elderly African Americans. In this
disease, toxic transthyretin intermediates infiltrate not
the peripheral nerves but the heart, resulting in diastolic
dysfunction.
Early Stage Approaches
As FoldRx and Amicus race to get their respective
molecules through clinical trials, other companies are
carving out their own therapeutic niches in rare diseases.
Reata, a Texas-based start-up that recently raised nearly
$23 million in a Series D [200630445],
has developed a cell-based high-throughput screening assay
called RPM (Rescuing Proteins from Misfolding)
to look for small molecules that restore the folding of p53,
an important regulatory protein mutated in many cancers, and
superoxide dismutase 1 (SOD1), a protein that has been
implicated in the devastating neurodegenerative disease
amyotrophic lateral sclerosis (ALS). The company has
identified lead molecules for both its cancer and ALS
programs and hopes to begin testing them in humans in the
coming months.
Reata may have competition from Peter Lansbury, PhD, a
neurologist at Harvard
Medical School
, who is rumored to be in the
process of forming his own company to develop ALS
chaperones. Using a structure-based approach, his group
screened through several million molecules to find compounds
that seemed likely to nestle into the crevice between the
two halves of SOD-1 and stabilize its conformation.
Lansbury's team identified 15 molecules that shore up SOD-1
folding and prevent aggregation of toxic intermediates in
vitro. Several of these compounds are now being tested
in an animal model of ALS.
Lansbury's outfit is so embryonic, it's probably not fair
to categorize it as a start-up. The organization is still
very much under wraps: there's no word yet on who will be
running the company or who the potential backers might be.
Research from Oregon Health and Science University's
Oregon National Primate Research Center could be the
genesis for another company if researcher P. Michael Conn,
PhD, has his way. He's been studying the effects in cultured
cells of a small, hydrophobic molecule called IN3 to correct
the folding of disease-causing mutants of the
gonadotropin-releasing hormone receptor(GnRH). (Defects in
this hormone receptor result in hypogonadotropic
hypogonadism, a disease characterized by low testosterone
levels.) Merck
& Co. Inc.
, which originally developed
IN3 and retains the rights to it, has yet to make public its
development plans for the molecule. But based on his
research, Conn believes a similar approach could be used to
stabilize the folding of other disease-associated proteins.
"We've developed a strategy to identify the receptors most
likely amenable to rescue," he says, noting that the work is
applicable across a wide range of diseases. One potential
candidate: cystic fibrosis, an inherited disorder caused by
a defect in the CFTR ion channel. Other diseases being
targeted include cancer, cataracts, and neurodegenerative
disorders. Conn is currently working with OHSU and other
companies to spin out the technology.
Targeting Neurodegenerative and Metabolic Diseases
A few bold start-ups are thinking outside the orphan
disease model. They believe they can adapt their screening
platforms to identify molecular chaperones for diseases with
whopping markets, including neurodegenerative afflictions
such as Alzheimer's and Parkinson's disease and metabolic
disorders such as type II diabetes. It's hard to know if
this approach will lead to viable therapies though; all of
the compounds being developed are preclinical, and data from
animal models are only just starting to emerge. One company
generating significant buzz is Satori. That company recently
brokered a deal with the Mayo Clinic to in-license a
compound derived from an extract of the black cohosh plant
after seeing preliminary data linking the molecule to
b-amyloid lowering in cellular assays. Using medicinal
chemistry, the company has now developed a series of orally
active compounds that disrupt amyloid aggregation in animal
models, shifting the balance toward less toxic versions of
the Alzheimer's protein.
Like Satori, Senexis
Ltd.
, AC Immune SA, and Zyentia also hope to
develop chaperone therapies for Alzheimer's. Senexis is
focused on building its small-molecule Alzheimer's program,
after licensing technology from BTG
PLC
in early 2006. [200620101]
Mark Treherne, the company's CEO, says at least one of
Senexis' molecules is in late-stage optimization. "We
haven't identified the final molecule for oral delivery, but
we aren't far off," he claims. Switzerland's AC Immune,
meantime, is developing what it calls morphomers,
small-molecules that bind noncovalently to amyloid
aggregates to break them apart. In May 2005, the company
raised a $17.5 million Series B, with backing from a group
of undisclosed investors. [200530242]
On December 7, Genentech signed a broad research
collaboration with the company to gain access to another
piece of its technology platform: AC Immune's
anti-beta-amyloid antibody expertise. The deal wasn't cheap:
if AC Immune's molecules meet their clinical and regulatory
milestones, it will cost Genentech more than $300 million.
University
of Oxford
spinout Zyentia, meanwhile, is
taking a different approach. Instead of developing orally
available chaperones, the company is trying to build small
peptides ranging in size from seven to 21 amino acids that
can interfere with amyloid aggregate formation. The company
believes these peptides, which are being developed for
intranasal delivery, will be much more potent than
small-molecule chaperones. CEO Jess Zurdo says that's
because the amyloid aggregates have so little structure that
small molecules won't be able to bind tightly enough to
alter their folding unless given in massive amounts, which
could lead to unwanted toxicities. In addition to their
Alzheimer's platforms, most of these companies believe they
can harness their know-how to develop therapeutics for other
large indications. Satori and Zyentia have discovery
programs in both Parkinson's and type II diabetes, whereas
Senexis has a diabetes program in early stages of
development.
The Importance of a Technology Platform
Without exception, biotech execs and investors
interviewed for this story repeated a now-familiar mantra:
products are the preeminent focus. "You need to have a
product focus. That's where the significant partnering deals
will take place," says PureTech's Zohar. Companies such as
Pfizer
Inc.
, after all, have a history of paying big
bucks to gain access to first-in-class products. In April,
the company spent $500 million to acquire Rinat
Neuroscience Corp.
, primarily for a
monoclonal antibody therapy for Alzheimer's still in
preclinical development. [200610048]
Then in October, the company bought PowderMed Ltd. in an
all-cash transaction worth $230 million. [200610169]
With the recent failure of torcetrapib, the company will
likely redouble its acquisition activities. (See "Best
Laid Plans: Pfizer's Torcetrapib Tanks," IN VIVO,
December 2006 [2006800216].)
But equally important is a robust discovery engine for
finding those compounds in the first place. One of Amicus'
strengths, for instance, has been its ability to develop in
quick succession a series of compounds for the different
LSDs. Though individually the markets for these drugs aren't
huge, when summed, they have the potential to generate an
impressive revenue stream. Amicus execs say the company is
well positioned to use its discovery platform to identify
other pharmacological chaperones to treat cancer,
neurodegenerative disorders, and metabolic disorders. Reata
and FoldRx also appear to have robust discovery engines that
have the potential to generate potential hits quickly.
"That's clearly attractive to investors," says Richard
Labaudiniere, PhD, president and CEO of FoldRx. "The
platform can be applied to rare diseases or ones with larger
markets, with quick access to product," he says. Already,
the company is using its platform to develop potential drugs
that thwart the misfolding of a-synuclein, a protein
implicated in Parkinson's disease.
A broad technology platform is likely to be more
interesting to potential collaborators and acquirers, too.
Merck & Co. Inc. ponied up $400 million in May 2006 for
GlycoFi
Inc.
, a promising start-up developing
glycoprotein therapeutics and next-generation antibodies. [200610072]
This fall, the pharma shelled out a whopping $1.1 billion
for Sirna
Therapeutics Inc.
, a leader in
RNA-interference-based drugs. [200610181]
(See "Merck Nabs Pole Position in RNAi with $1.1 billion
Sirna Buy," IN VIVO, November 2006 [2006800188].)
And most recently, in early December GlaxoSmithKline
PLC
acquired Domantis
Ltd.
, another next-generation antibody
developer specializing in so-called domain antibodies, which
are only the fraction of the size of full-sized antibodies.
[200610210]
Validating Deals Are Coming
Despite Genentech's recent deal with AC Immune, there's
no widespread indication that pharmaceutical companies
perceive molecular chaperones to be in the same realm of
importance as RNAi or antibody technologies. "Pharmaceutical
execs are interested, but, for the most part, they certainly
haven't taken out their checkbooks," says FoldRx investor
Cohen. It's likely that R&D execs within Big Pharma are
still trying to wrap their heads around the discovery models
espoused by these young start-ups. "They may feel
uncomfortable because the approach doesn't fit with the
enzyme inhibition paradigm pharmas have historically used,"
says Philip Thomas, PhD, scientific founder of Reata and
biochemist at University of Texas, Southwestern.
There's also scant evidence that these molecules work as
advertised. In many cases, data from animal models are just
starting to emerge and only a handful of molecules are
actually in the clinic. Many think positive news from the
Amicus and FoldRx clinical trials—if and when it comes—could
spur increased deal flow across the sector. "Once there's
proof-of-concept, pharma companies will need to play
catch-up. The easiest way to do that is through
collaboration or acquisition," says Senexis' Treherne.
PureTech's Zohar agrees: "Interest in the field is growing,"
she says. "Companies will probably ink significant deals in
the near term."
But it's unlikely the products will come cheaply.
Companies such as Amicus and FoldRx are sufficiently
well-funded that they can put off partnering decisions for
several years, until their products are much further along
in human trials. And the orphan markets are small enough
that there's the real possibility these companies could take
their drugs all the way to market without the heavy lifting
of a big partner. Others, such as Satori and Senexis, are
biding their time and amassing data showing
proof-of-principle in the hopes of striking a rich deal.
"Things are being gated by us," claims Zohar. "There are
many options, some of which provide significant value in the
near term, while others enable us to capture more of the
upside at a later stage," she says.
But success won't come easily. Access to the public
markets remains problematic. Amicus tested the IPO waters in
May 2006, but like so many other biotechs in the past couple
of years it withdrew its registration a few months later,
citing poor market conditions. [200630287]
The company was fortunate: 90% of the existing backers were
willing to shell out the money necessary to advance the
company's clinical programs, resulting in its $60 million
Series D. But other outfits, with less robust pipelines, may
not fare so well.
The specter of toxic side effects will also loom until
more products reach Phase III clinical trials. By that point
the products could face significant competition from
products developed using alternate approaches. Amicus'
Gaucher's drug, for instance, may vie for market share with
a small-molecule currently in Phase II clinical trials being
developed by Genzyme. And the Alzheimer's therapies aren't
nearly as far along as a monoclonal antibody being developed
by a well-backed team from Wyeth
and Elan Corp. PLC.
Still, biotech execs and VCs argue that companies such as
FoldRx and Amicus, with technology to develop novel drugs
capable of remedying a breathtaking number of diseases, are
worth the potential risk. "This is when we like to invest,"
says Cohen.
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