Finance Watch: Government Grants Galore And Other New Funding Sources

While Forbion's new €360m venture capital fund and other investors have emerged to fund private and public companies, BARDA and other US agencies have been active supporters of biopharma firms in recent weeks. Also, KSQ grabs $80m in VC cash and VelosBios brings in $50m.

Biopharmaceutical companies have announced an abundance of investment in their companies from US government sources recently, which adds to the flurry of new investment funds backing drug developers, including the new €360m ($415.9m) venture capital fund revealed by Forbion on Oct. 1.

Forbion joins Hillhouse Capital, which closed a $10.6bn private equity fund in September to invest across several industries, including health care, as an investor with a renewed commitment to life science opportunities. (Also see "Finance Watch: Morphic's 'Smooth' Progress With Oral Integrin Inhibitors Justifies $80m Series B" - Scrip, 26 Sep, 2018.) Similarly, Vivo Capital closed a $635m fund last month to back small and mid-cap public life science companies. (Also see "Finance Watch: Lilly Completes Elanco Animal Health Spin-Out As New IPO Filings Keep Rising" - Scrip, 21 Sep, 2018.) 

The US government remains a major source of development financing and recently has made several million dollars available to biopharma companies through contracts with the Biomedical Advanced Research and Development Authority (BARDA) under the Department of Health and Human Services (HHS), via Small Business Innovation Research (SBIR) grants from National Institutes of Health (NIH), and through the FDA's Orphan Products Clinical Trials Grants Program.

In one of the more surprising grants, HHS said on Sept. 20 that it will work with Santa Monica, Calif.-based Opiant Pharmaceuticals Inc. on the development of a fast-acting, long-lasting, intranasal opioid overdose drug through a partnership between the company and BARDA. (Also see "Opioids Could Become Bioterror Weapons, US Fears; BARDA Funds Countermeasures " - Pink Sheet, 24 Sep, 2018.)

Opiant and BARDA will develop a new formulation of naloxone called nalmefene to fight back against excessive opioid use, which is one of the most common causes of overdose in the US; the agency also noted that there is concern about weaponization of opioids.

The partnership's initial one-year term will give Opiant a $611,000 BARDA contract for the development of intranasal nalmefene, but the agreement can be extended up to a three-year term totaling $4.6m to support FDA approval of the product. Opiant received funding earlier this year from the National Institute on Drug Abuse (NIDA), part of the NIH, to help fund formulation work and clinical trials.

Opiant followed the BARDA announcement with a public offering of 811,764 shares at $17 each, which closed on Sept. 28 with $12.7m in net proceeds to fund the company's alcohol use disorder and bulimia nervosa programs.

Grant Funding For Orphan Products, Ebola Treatments And More

Benefitting several companies, the FDA said on Sept. 24 that it awarded $18m via the Orphan Products Clinical Trials Grants Program to assist in the completion of 12 rare disease drug studies, including: $1.75m for Alkeus Pharmaceuticals Inc.'s Phase II study of ALK-001 in Stargaardt disease; $2m for a Phase II study of oral vancomycin in primary sclerosing cholangitis at the University of Arizona, Tempe; $2m for a Phase II study of Cyclacel Pharmaceuticals Inc.'s seliciclib in Cushing disease at Cedars-Sinai Medical Center in Los Angeles; and $750,000 for a Phase I study of Amgen Inc.'s Imlygic (talimogene laherparepvec) in advanced pancreatic cancer at Columbia University in New York.

Also, Emory University received $1.5m for a Phase I/II study of Ad/PNP fludarabine in head and neck squamous cell carcinoma; $1.5m was awarded for Fibrocell Technologies Inc.'s Phase I/II study of gene-modified ex vivo autologous fibroblasts for dystrophic epidermolysis bullosa; $750,000 was granted for a Phase I/II study by Johns Hopkins University of CD8-reduced T-cells for myelodysplastic syndromes or acute myeloid leukemia; $2m was made available for OncoImmune Inc.'s Phase IIb study of CD24Fc in the prevention of graft-versus-host disease; and $1.5m was awarded to Patagonia Pharmaceuticals LLC for its Phase II study of PAT-001 (isotretinoin) for congenital ichthyosis.

Finally, the FDA also provided $1.4m for a Phase II study of kisspeptin in dopamine agonist intolerant hyperprolactinemia by The General Hospital Corp. in Boston; $1.4m for a Phase IIa study of a subcutaneous hydrocortisone infusion pump to treat congenital adrenal hyperplasia at the University of Minnesota, Minneapolis; and $2m for the University of North Carolina at Chapel Hill's Phase II study of sildenafil for prevention of bronchopulmonary dysplasia.

Since 1983, the grant program has provided more than $400m to fund more than 800 clinical trials, including studies that supported more than 60 orphan product approvals.

In other grant funding news:

• Oligomerix Inc. – a private Bronx, NY-based firm focused on the discovery and development of small molecule inhibitors, immunotherapeutic approaches and biomarkers targeting tau oligomers in the treatment of Alzheimer's disease – announced on Oct. 1 that it received a $2.4m SBIR Phase I/Phase II Fast Track grant from the NIH's National Institute on Aging (NIA). The grant will fund the development of a disease-modifying small molecule drug for Alzheimer's and Alzheimer's-related dementias with tau pathology. (Also see "Investors Find Opportunity In Tau-Targeting Biopharmas" - Scrip, 22 Oct, 2015.)

• San Diego-based Mapp Biopharmaceutical Inc. said on Sept. 28 that it was awarded a BARDA contract worth $14.8m initially with options for an additional $32m to advance MBP134 for the treatment of Sudan ebolavirus through a Phase I clinical trial. MBP134 combines two human monoclonal antibodies identified from a survivor of the 2013-2016 Ebola outbreak via a collaboration between Adimab LLC, MappBio and a group of academic and government partners, including National Institute of Allergy and Infectious Diseases (NIAID)-supported Centers of Excellence for Translational Research at Albert Einstein College of Medicine (Einstein), Public Health Agency of Canada, the University of Texas Medical Branch at Galveston, and the US Army Medical Research Institute of Infectious Diseases (USAMRIID). MappBio licensed MBP134 from Adimab and Einstein. MappBio already is working on the ebola treatment ZMapp. 

• BioAxone BioSciences Inc. in Cambridge, Mass. said on Sept. 27 that it received an SBIR Fast Track grant for up to $1.4m from the NIH's National Institute of Neurological Disorders and Stroke (NINDS) to support development of the Rho Kinase 2 (ROCK2) inhibitor BA-1049 to improve recovery in chronic spinal cord injury. Phase I of the award will support a proof-of-concept studies in animals. Preclinical studies to date have shown potential for BA-1049 to improve endothelial cell barrier function and restore the blood-brain barrier in neurovascular disease. BioAxone licensed a Rho inhibitor for spinal cord injury to Vertex Pharmaceuticals Inc. in 2015; Vertex initiated a Phase IIb/III study in 2016. (Also see "BioNotebook: Vertex/BioAxone and four other deals; three VC updates, three public offerings" - Scrip, 21 Feb, 2015.)

• Philadelphia-based Mebias Discovery LLC, which is developing drugs that target G-protein coupled receptors, said on Sept. 24 that it will use a grant from the National Institute of Drug Abuse (NIDA) for preclinical pharmacological and pharmaceutical profiling of its mu-opioid receptor drug candidate for the treatment of pain. The company revealed preclinical data last year showing that its G-protein agonists do not cause respiratory depression and drug addiction associated with marketed opioids. If initial studies under the NIDA grant are successful, Mebias will be eligible for additional NIDA funding.

• The Cancer Prevention and Research Institute of Texas (CPRIT) awarded $50.6m in grants to three different companies at the end of August: $19.95m to Magnolia Neurosciences Corp. (also known as Korysso Therapeutics Inc.) to fund the development of KOR-8287 for neurological conditions caused by chemotherapy through Phase I and IIa clinical trials with Phase I kicking off in the second half of 2019; $18.75m for Forbius (Formation Biologics) to fund development through Phase IIa for AVID100, an anti-EGFR antibody-drug conjugate for breast, head and neck, and lung cancers; and $11.78m for CerRx Inc., which is developing a combination therapy regimen for cutaneous T-cell lymphoma. CPRIT was established by a Texas constitutional amendment in 2007 that allowed for the sale of $3bn in state bonds to fund cancer research, prevention programs and services. (Also see "Texas thinks big as it provides $81mn to cancer research, drug development and venture support" - Scrip, 2 Apr, 2012.)

KSQ Leads Recent VC Deals With $80m Series C

Cambridge, Mass.-based KSQ Therapeutics more than doubled its money with an $80m Series C venture capital round announced on Sept. 28 after coming out of stealth mode a year ago with $76m in Series A and B cash and with former Genzyme Corp. executive David Meeker as its CEO. (Also see "KSQ Comes Out Of Stealth Mode With $76m And Meeker As CEO" - Scrip, 2 Oct, 2017.)

New investors Baillie Gifford, Cowen Healthcare Investments, Invus and Lilly Asia Ventures backed the Series C along with prior investors Flagship Pioneering, Polaris Partners, ARCH Venture Partners and Alexandria Equities. The new funding will support the advancement of cancer drug candidates from KSQ's CRISPRomics drug discovery platform into clinical trials.

Its first candidate – a modified adoptive T-cell immunotherapy that's shown efficacy in animal models of PD-1 resistance – is expected to reach the clinic within the next 18 months. Up to three additional candidates will be moved into investigational new drug (IND) application-enabling studies.

KSQ has 12 cancer drug development programs, including adoptive cell therapies, immuno-oncology candidates and targeted therapies. The company also will apply its CRISPRomics platform, which allows for rapid identification of the most relevant drug targets linked to genes specifically involved in a given disease, in other areas of immunology and rare diseases.

In other recent private company financings:

• Arix Bioscience PLC said on Oct. 1 that it invested $11m to co-lead a $58m Series A round with Sofinnova Ventures for San Diego-based VelosBio Inc., which is developing novel antibody-drug conjugates (ADCs) to treat hematologic malignancies and solid tumors. (Also see "Incubator Addition: Arix CIO On Why Fund Added VelosBio To Portfolio " - Scrip, 1 Oct, 2018.) Pappas Ventures, Chiesi Ventures and prior VelosBio investors Takeda Ventures and Decheng Capital also participated in the round. The capital will be used for nonclinical development to advance the company's programs into clinical studies. VelosBios CEO Dave Johnson was the CEO of Calquence (acalabrutinib) developer Acerta Pharma BV when it was sold to AstraZeneca PLC in 2015 for up to $7bn. (Also see "AstraZeneca In Buy Now, Pay In Full Later Deal For Majority Acerta Stake " - Scrip, 17 Dec, 2015.)

• Oakland, Calif.-based Modis Therapeutics Inc. revealed a $30m Series A round on Oct. 1 co-led by F-Prime Capital Partners and OrbiMed with participation from founding investor Aceras Life Sciences LLC and new investor Osage University Partners. Modis' lead drug candidate MT1621 for the rare genetic mitochondrial disease thymidine kinase 2 deficiency (TK2d) is based on research from labs at Columbia University Irving Medical Center and Vall d'Hebron Research Institute in Barcelona, and other academic collaborators. MT1621 was tested in TK2d patients in the academic setting, but Modis is planning additional clinical studies for the drug, which has orphan drug designations in the US and Europe and a rare pediatric disease designation in the US. The company also has additional programs in development to treat TK2 deficiency and other mitochondrial diseases with defined genetic causes.

• Akrevia Therapeutics launched in Cambridge, Mass. on Sept 27 with $30m in Series A cash to develop immuno-oncology drugs. F-Prime Capital Partners and Atlas Ventures co-led the round to advance Akrevia's Aklusion platform for the development of therapeutics antibodies, cytokines and chemokines that are activated within the tumor microenvironment. The technology was licensed from City of Hope and Jefferson University, and the initial drug candidate is an antibody targeting CTLA-4.

• The Canadian firm AbCellera Biologics Inc. said on Sept. 27 that it closed a $10m Series A round led by DCVC Bio to accelerate its antibody discovery business and expand its advanced technology capabilities, including computation, protein engineering and immune repertoire profiling. The Vancouver, British Columbia-based company's CEO Carl Hansen said in a statement that AbCellera will accelerate its partnering activities, which have been profitable and achieved triple-digit growth during the past three years. Existing partners include GlaxoSmithKline PLC, Pfizer Inc., Teva Pharmaceutical Industries Ltd. and Merck & Co. Inc.  (Also see "Deal Watch: Are Ultragenyx, REGENXBIO In A Bidding War For Dimension?" - Scrip, 26 Sep, 2017.) 

• Tolremo Therapeutics AG, based in Zurich, Switzerland, said on Sept. 24 that it raised a CHF9m ($9m) Series A round to fund its development programs focused on preventing drug resistance in cancer and lengthening the efficacy of cancer therapies. BioMedPartners led the round with participation from Redalpine and Altos Venture as well as prior Tolremo backers Zurcher Kantonalbank and other biotech investors. The company previously raised CHF2.4m in 2017.

• Tvardi Therapeutics Inc. of Houston was founded in 2017 to develop STAT3 inhibitors and announced a $9m Series A financing on Sept. 20. The venture cash will fund completion of an ongoing Phase I study for lead candidate TTI-101 in the treatment of solid tumors and completion of investigational new drug (IND)-enabling studies for a second candidate in cachexia and other non-cancer indications. The company's molecules come from the lab of Tvardi co-founder and President David Tweady, who also is head of internal medicine at MD Anderson Cancer Center and who developed the compounds prior to the Series A funding with $15m in non-dilutive grant funding.