Traversa Therapeutics Inc

Traversa aims to solve a fundamental problem: the adequate delivery of short interfering RNA molecules to a wide range of cell types via a non-cytoxic mechanism.

Hoping to deliver on RNAi

505 Coast Boulevard South

La Jolla, CA 92037

Phone: [phone]

Fax: [phone]

Web Site: www.traversathera.com

Contact: Hans Petersen, President & CEO

Industry Segment: Biotechnology

Business: Discovery and development of RNA interference delivery technology

Founded: July 2006

Founders: Steven Dowdy, PhD; Hans Petersen

Employees: 5

Financing to Date: $2 million

Investors: San Diego Tech Coast Angels; Mesa Verde Venture Partners; The Morningside Group

Board of Directors: Hans Petersen; Francois Ferre, PhD (co-CEO Althea Technologies); Marc Lanci

Hans Petersen, founder and CEO of Traversa Therapeutics Inc., is no stranger to the challenges of running a cutting-edge biotech company. In 2003, he took the reins at Meriture Inc., a structural bioinformatics company focused on the inhibition of HIV, influenza, and Ebola fusion proteins. "We were trying to develop drugs with software—a concept that had a lot of promise but was a difficult problem to solve," he says. Operations at Meriture shut down three years later, but Petersen is the first to admit his tenure there was time well spent.

With a background in software management and only limited biotech experience, running the company allowed Petersen to gain first-hand knowledge of the specialized skills required to manage and raise funds for a fledgling biopharma. It also fueled his belief that even companies intent on developing first-in-class therapeutics ought to have alternative revenue streams. "With backup revenue it’s possible to weather the difficult financing cycles," he says.

In addition, Petersen also formed a strong bond with Meriture scientific advisory board member, Steven Dowdy, PhD, a Howard Hughes Medical Institute investigator and professor at the University of California San Diego’s School of Medicine. By 2006, Dowdy was ready to commercialize large-molecule delivery technologies discovered in his lab. Encouraged by their previous collaboration at Meriture, Petersen was eager to be part of the new venture and Traversa Therapeutics was born. "When I teamed up with Steve, it was a good match," says Petersen.

Despite being less than two years old, and having raised only one $2 million Series A round, Traversa is a company generating a lot of buzz. [See Deal] That’s because it has very intriguing technology that may solve a fundamental problem: the adequate delivery of short interfering RNA molecules to a wide range of cell types via a non-cytoxic mechanism. Proponents of RNA interference have long predicted that it will become a critical therapeutic modality, alongside small molecules and proteins. That belief has fueled a number of costly and high-profile deals, including Alnylam Pharmaceuticals Inc.’s non-exclusive partnerships with Novartis AG, Roche, and Takeda Pharmaceutical Co. Ltd., and Merck & Co. Inc.’s $1.1 billion acquisition of Sirna Therapeutics Inc. [See Deal] [See Deal] [See Deal] [See Deal] (See "Early Movers in RNAi," IN VIVO, October 2007 (Also see "Early Movers in RNAi" - In Vivo, 1 Oct, 2007.).)

But what will ultimately separate winners and losers—beyond the settlement of looming intellectual property battles—will be the ability to deliver therapies consistently and effectively with drug-like bioavailability. "This is the rate limiting step. The company that solves the delivery challenge wins the gold ring," claims Dowdy. Already a handful of companies including Silence Therapeutics PLC and Protiva Biotherapeutics Inc. (a division of Arbutus Biopharma Corp.) have developed lipid-based delivery vehicles for siRNA molecules, but such first-generation technologies are not without problems. The pharmacokinetics of these molecules are less than ideal; nor do they have the ability to enter into a wide array of cells, having a preference for the liver, spleen, and kidney. Finally, notable cytotoxicity has also been observed. "Most of these technologies were developed during the gene therapy craze," says Dowdy. (See "In RNAi, Technology Proliferates Beyond the Big Two," START-UP, April 2007 (Also see "In RNAi, Technology Proliferates Beyond the Big Two" - Scrip, 1 Apr, 2007.).)

Dowdy believes Traversa can circumvent the limitations of liposome-based delivery because its highly engineered siRNA missiles coopt a natural process used by all cells called macropinocytosis. First discovered six decades ago, macropinocytosis is an actin-dependent form of cellular entry triggered by specialized amino acid sequences called protein transduction domains (PTD). The resulting droplet of fluid—called a macropinosome—is pulled into the cell, where a drop in pH triggers a release of its contents.

To adequately deliver siRNAs to a variety of cells, Dowdy’s group created a carrier containing multiple arginine-rich protein transduction domains linked to a double-stranded RNA-binding domain (DRBD). It’s this DRBD that binds to the siRNA of interest via a sequence-independent mechanism. Once inside a cell, the siRNA disassociates from the carrier and escapes out of the vesicle via an unknown mechanism. It then binds to the RNA Induced Silencing Complex (RISC), a multi-protein complex inside the cytoplasm, triggering the selective RNAi response.

In vitro studies of Traversa’s PTD-DRBD complexes are compelling: according to Petersen, the carrier can enter a wide variety of cells, including B cells, T cells, macrophages, fibroblasts, glioblastoma cells, and neuronal cells. The company is currently developing its first therapeutic—a complex that knocks down activity of the epidermal growth factor receptor and Akt-2 kinase genes—for use in glioblastoma, the most common and deadly form of brain cancer. Preclinical work in mice suggests that Traversa’s warhead is effective: in a 50-mouse study, half the mice were injected with three doses of the PTD-DRBD-carrying therapeutic at the major tumor site. While the control mice died at day 14, mice dosed with the Traversa compound lived an average of 30 to 32 days and MRI studies confirmed that tumor size shrank approximately five-fold during that period. "It’s still early days," says Dowdy. "We are on version one. Version three—or four—holds the most promise," he says. In addition, the company also hopes to use the siRNA delivery technology to develop leukemia medicines.

True to his belief in multiple revenue streams, Petersen is exploring multiple ways to deploy Traversa’s technology. He sees great potential in out-licensing the technology to partners interested in using it either for discovery purposes or for potential therapeutic drug development. He believes a target-based therapeutic deal would generate funds equivalent to a "decent-sized Series B." That’s attractive to current investors, which include Mesa Verde Venture Partners and The Morningside Group, because it allows the company to generate cash without diluting the initial investors’ positions. Moreover, it brings cash flow in the door sooner rather than later and that capital can be redirected to furthering the internal therapeutic pipeline," says Roger Flugel, a principal with Sanderling Ventures and a board observer at Traversa.

To date, the company has yet to announce a partnership, but as many as 14 different companies have signed evaluation agreements that give them an early taste of the technology. Petersen believes that several are very interested in inking screening deals to validate drug targets in cell-based assays. Another five companies are interested in using the technology both for screening and therapeutic purposes. "We hope to sign three deals in the screening arena and one therapeutic-based arrangement by the end of 2008," says Petersen. "We plan to double that activity in 2009," he says.

It’s a strategy that resonates with Flugel. "Enabling platform technologies that solve a specific problem related to drug discovery or drug delivery can be quite valuable," he claims. "There’s real potential for Traversa to generate early revenues through partnering in the drug discovery setting. Longer term, the bigger value will be realized through therapeutics that utilize the technology. It’s dual faceted," he says.

Petersen is reticent to disclose too much before the specific terms of pending deals are announced, but he notes that the screening partnerships won’t involve licensing, just a per-well price. "We make the protein; the partner uses it. That’s the end of the transaction," he says. More interesting—and potentially much more lucrative—are the therapeutic-based partnerships. Although Petersen hopes to eventually license the technology non-exclusively the way Alnylam has done with its RNAi know-how, he believes the first deals will be exclusive agreements built around a specific therapeutic area such as in ophthalmology. "It would be nice if companies wanted the technology so badly that they were willing to sign non-exclusive arrangements. We need to get some momentum first," says Petersen.

Inking deals is clearly one of the company’s highest priorities—both in terms of validating the technology as well as bringing in additional financial resources. Petersen says the challenges aren’t technical—the technology works—but business development related. To date, every potential partner he’s discussed the technology with has at least agreed to a trial evaluation. "We need to follow up and work through the process to close the deals," says Petersen. To that end, Petersen recently brought on board as its SVP of business development Barry Toyonaga, PhD, a chemist and molecular immunologist who was previously the CEO of Ontogen Corp. and a partner with the private equity firm Ventana Capital.

There’s no question Traversa’s team is passionate about the technology’s potential. They’ll need that passion. With pharma’s huge interest in RNAi, a plethora of competitors are attempting to use their own proprietary technology to solve the delivery challenge. Add Traversa to the list of fledgling companies worth watching.

—Ellen Foster Licking