What does it take to lead a biotech start-up in 2020? Three start-up leaders with companies illustrating different stages of the early biopharma lifecycle give their insights:
- protein degradation leader Nurix, which just completed an IPO and is preparing to enter first clinical trials;
- Arrakis, which is targeting RNA with small molecules, and signed its first big pharma alliance in April 2020; and
- mRNA pioneer Strand Therapeutics, which spun out from Massachusetts Institute of Technology (MIT) last year with $6m in seed funding.
The role of biopharma start-ups in bringing innovative therapies to the market has grown enormously in recent years. These waves of new specialist companies often have the most innovative approaches to targeting disease, and big pharma has become increasingly reliant on fresh ideas to power pipelines. Executives from Nurix Therapeutics, Inc., Arrakis Therapeutics and Strand Therapeutics Inc were speaking in a 9 September webinar entitled Futurescaping of Oncology, part of the Demy-Colton Virtual Salon series.
But these companies are more than just M&A targets or in-licensing opportunities for big pharma, and increasingly have the option of becoming fully integrated biopharma companies – with the likes of Alnylam Pharmaceuticals Inc. and the biotech-of-the-moment Moderna, Inc. among the best examples.
Data from Pitchbook shows that venture capital funding for new biopharma start-ups more than tripled between 2009 and 2019, soaring from $5bn in 2009 to $17bn in the period. And despite the COVID-19 pandemic, 2020 is set to be a record-breaking year for biotech IPOs, showing that there are rich rewards for investors and entrepreneurs that can steer companies to this crucial inflexion point.
But that does not mean that anyone can launch a successful biopharma start-up, which can still easily take a decade before a ground-breaking innovation is turned into an FDA approved medicine – with far more molecules failing than succeeding in this process.
On the virtual panel, Nurix CEO Arthur Sands, Arrakis’ co-founder and chief scientific officer Jennifer Petter and Jacob Becraft, co-founder and CEO of Strand Therapeutics discussed the scientific and business challenges facing them in the bid to bring their innovative drug platforms to patients.
Persuading Investors To Back An Unproven Platform
Once you have a potential therapeutic modality or platform able to offer patients something new, finding investors who understand the potential of the science, and believe in you and your key personnel is one of the biggest tasks facing emerging companies.
That challenge can take years of patience and persistence, especially when your platform is first-in-class and still very much clinically unproven. Arthur Sands joined Nurix as CEO in 2014, after having spent 19 years as CEO building up Lexicon Pharmaceuticals, a company he helped co-founded. Armed with that experience, Arthur says he spent his first few years at Nurix simply educating investors about the basic science behind targeted protein modulation and the ubiquitin proteasome system.
“In the early days of targeted protein modulation, there weren’t a lot of us. In fact, there was probably only a couple and, Nurix was one of the early movers,” he said. “Companies go through certain phases and [the first] is the ‘beauty is in the eye of the beholder’ phase. [That involves] finding a partner that appreciates what you’re doing. They have to have some internal understanding and insight.”
In Nurix’s case, that company was Celgene Corporation, who signed a broad multi-target $150m alliance with the start-up in 2014. Celgene was open to the company’s science because its blockbuster Revlimid targeted cereblon (CRBN), part of the family of E3 ligase proteins Nurix is focused on.
“They understood cereblon, they knew what could be done,” said Sands. “Others didn’t understand it. We’d walk into business development meetings and start talking about the ubiquitin proteasome system and the eyes would glaze over.”
Sands continued: “The second phase, I guess I’d call the Missouri phase, which is the “show me” phase. And all the big pharma executives who don’t have insight in this particular technology said ‘Show me the data, show me the data’… We had to give countless data presentations and free seminars. You know it finally penetrated because we [generated] the data!”
In recent years, momentum in protein degradation has built, to such an extent that Nurix is in competition with other companies to prove that their platform and solutions to the technical problems are the best.
Sands admits the Nurix founders were worried when Bristol Myers Squibb announced the takeover of Celgene in March 2019, as it raised the possibility of the alliance being terminated in the corporate shake-out. That did not happen – and Arrakis’ Jennifer Petter was able to provide a perspective from inside Celgene, where she was then vice president of chemistry.
Petter said, “I was at Celgene at the time, on the other side of the table. And I can say that Celgene represented precisely the kind of party that appreciated what Nurix was doing and therefore it was really a very good marriage. So, if a potential partner is already thinking about the same problem, you’re 80% of the way there [to a good relationship].”
Jennifer co-founded Arrakis with its CEO and fellow biotech veteran Michael Gilman, who previously started and sold Stromedix and Padlock Therapeutics, Inc. Their vision for Arrakis is to pursue “undruggable” targets by reimagining small molecule drug discovery. They aim to do this by making RNA the drug target instead of proteins, called RNA-targeted small molecule medicines (rSMs).
Arrakis believes its platform can hit any of the 200,000 RNAs involved in coding, decoding, regulating and expressing genes, and its technology is agnostic to target or disease. The company was launched with $38m via a series A financing in February 2017 and followed this up with a $75m series B round in April 2019.
Petter said the company had been approached by most of its partners rather than vice versa. She believes the small molecule focus helps de-risk the proposition. “We’re focusing on small molecules, which are a highly validated therapeutic modality; not that they’re perfect, but we are [all] familiar with their imperfection,” she said. “Secondly, it represents a broad new potential range of thousands of possible new targets, and many of these overlap from a mechanistic perspective with targets that are already known and validated.”
The company is keeping its cards close to its chest as to what diseases will be targeted and exactly how, but Arrakis has identified transcription factors (TF) as one set of previously undruggable targets that could be opened up by their approach. TFs are master regulators of biology in cancer and MYC, one of the earliest-identified cellular oncogenes. MYC is known to affect the expression of numerous genes, plays critical roles in cell cycle progression and is dysregulated in roughly 70% of human cancers.
In April 2020 Arrakis signed a deal with Roche to use its platform to cover its primary focus areas – oncology, immunology and infectious disease, as well as neuroscience and rare diseases. In addition to collaborating with partners, Arrakis is developing an internal pipeline of rSMs to treat a range of diseases including cancers and other conditions that have proven challenging with other drug approaches and modalities.
Funding Through The Valley Of Death
Jacob Becraft is a synthetic biologist and entrepreneur who co-founded Strand Therapeutics as a spin-out from MIT last year, with $6m seed funding led by venture capital fund Playground Global.
Together with colleagues at MIT’s renowned Synthetic Biology Center, he led the development of the world’s first synthetic biology programming language for mRNA. “What Arthur said about the ‘show me’ period of development, that is exactly our experience,” said Becraft. “Going out and trying to fundraise before the company existed and I would say: ‘Programmable messenger RNA will be the future, ‘ but found some life science investors skeptical and risk averse for such a novel approach.”
That is why one of Strand’s main investors is Playground Global, a Silicon Valley venture capital firm that has built a broad portfolio across automation and artificial intelligence, robotics and life sciences.
“We went to Silicon Valley and I said, ‘Programmable nucleotides are the future,’ and they were like, ‘Yes!’ But you know, in some areas of biotech, the response was, well ‘Show me.’ I was like, ‘Well, give me the money to,’” Becraft said. “So, it’s a cart before the horse [situation]. But that means it is an exercise in great storytelling as well as great science.”
He welcomed the economic plan put forward by Democrat presidential candidate Joe Biden, which proposes federal support for higher risk research. “I think the world would benefit greatly if the [US] government stepped in and provided more support for high-risk research, not just at the discovery phase, but really funding through the valley of death into a commercial product and for [hard-to-treat diseases areas] like pancreatic and [brain tumor] glioblastoma multiforme,” he said..
Becraft said being in the high-profile mRNA therapeutics field in 2020 was a “double edged sword.” On one hand, companies such as Moderna and BioNTech SE look set to gain validation of their technology – and huge levels of investment – thanks to their COVID-19 vaccines. On the other hand, their success puts pressure on new entrants to prove they have something of value to add to the field.
Messenger RNA acts as a go-between in turning DNA’s instructions into proteins that regulate organ functions. Harnessing these molecules opens the potential to turn a patient into a self-sufficient “drug factory.”
Limitations remain for current mRNA and oligonucleotide therapeutics, such as antisense or siRNA platforms, and the broader cell and gene therapy field. The core problem is in delivering these drugs into cells to produce a significant therapeutic response; they are currently limited to local ‘compartments’ such as the liver, eye or spinal cord.
The long-term safety of these therapeutics in chronic use is also not clear. Becraft said current gene therapies “essentially dump an unprogrammed gene into our cells.” He believes synthetic biology can transform the field by making gene therapy programmable.
Strand’s mRNA programming technology promises to make mRNA therapies safer and more effective by programming the location, timing and intensity of therapeutic protein expression inside the body using mRNA-encoded logic circuits. These implement cell-type specific expression by sensing and classifying the unique miRNA expression signatures of cells, as well as controlling the dosage of protein expression by responding to exogenously administered small molecules.
“If we can build messenger RNAs that can be switched off as well as on, and we build messenger RNAs that can hit multiple different mechanisms in a concentrated kind of orchestra of mechanistic stimulation, then we’re at a new level of m RNA,” said Becraft.
Strand’s lead scientists Darrel Irvine and Ron Weiss published a paper in Nature Cancer in August 2020 that showed its technology can simulate multiple mechanisms in known orders to stimulate multiple targets at once, creating a full-fledged immune response.
Working in mice, they used multifunctional oncolytic nanoparticles to deliver self-replicating IL-12 RNA that was encapsulated in lipids. In several of the mouse models, a single injection eradiated the tumors. The platform is now entering further studies in humanized mouse models, and the company expects to enter clinical trials in 2022.
Validating Your Platform
For Strand Therapeutics, the Nature paper is a perfect example of validating its science, representing a major step toward the goal of clinical trials.
Arrakis took a cautious approach to how long it might take to generate proof-of-concept data but decided to accelerate when the early signs were even more promising than expected. “We kept our heads down for the first couple of years to do two things,” Arrakis CEO Michael Gilman said in an interview earlier this year. “One was to build up the platform and figure out how to do it; the second was to really understand the reach of the platform and the magnitude of the opportunity.” (Also see “Arrakis Inks First Partnership In RNA-Targeted Collaboration With Roche” – Scrip, 8 Apr, 2020.)
Gilman said: “Once we realized that we were getting hits to every RNA that we screened – suggesting essentially that any RNA is in play for this approach – it became clear to us that there was an overwhelming number of targets that we couldn’t possibly scratch the surface of ourselves.”
That was when the Roche deal became a natural next step. Petter commented: “It gives us the time to enhance our platform, understand [more deeply] what we’re doing, and gives us the time and resources to focus on specific, internal targets and advance them as far as we can. So it’s highly enabling, I think, not just for Roche but for us as well.”
Taking R&D To The Next Level
Backing a biotech’s IPO before any of its drug candidates are in clinical trials is a risky maneuver for investors, but that is exactly what has happened with Nurix. In July this year it raised $209m when it went public on NASDAQ, with investors convinced by the solidity of its science.
Targeted protein degradation has been causing excitement in drug discovery for the last decade because of its potential to hit previously undruggable targets using small-molecule drugs. The technology is now reaching the moment of truth as the first candidates enter Phase I (Arvinas Inc. becoming the first in the field earlier this year, with another high-profile competitor Kymera also progressing towards this goal).
TPD drug platforms harness the body’s natural cellular recycling machinery – the ubiquitin proteasome system (UPS) – to break down or degrade unwanted proteins. Critical to this process is a group of enzymes called E3 ubiquitin ligases (E3 ligases) which direct the “tagging” of unwanted proteins with a molecule called ubiquitin.
Nurix is preparing its first ever Phase I trial based on its targeted protein degradation (TPD) platform, with its lead product, NX-212. It is an orally available BTK degrader for the treatment of relapsed or refractory B-cell malignancies. (Also see “Protein Degradation Leader Nurix Prepares First Clinical Trial” – Scrip, 15 Sep, 2020.)
Nurix is the only company aiming to use E3 ligases to raise protein levels as well as degrade them, which they call protein modulation. This could open a whole other avenue of possibilities.
An IPO clearly brings a fresh source of capital into the business, but also gives a company far greater control of its internal R&D strategy. “In the early stages you really have only two sources of capital, your partners and [private] investors,” said Sands. “But an IPO means your customers are primarily investors, depending on the amount of capital that was raised.”
The CEO continued: “An IPO allows the company and the investors to own the lead program, rather than partner them off, or do dilutive partnerships. So, it tilts [you] toward an internal pipeline and making one’s own choices to further the development of a wholly owned asset.”
“Some of your other partnership programs may be longer term and higher risk, and so they’re better to have with a partner,” he added. “But with a strong investor base, the company can make decisions on its own, and own those assets for the investor, it’s a great thing.”
Nurix, Arrakis and Strand will be part of a new generation of companies pushing the boundaries of medicine in the middle of this decade and beyond, but recent history has shown that the speed of progress, and picking winners is hard to call. Nevertheless, establishing a solid scientific foundation and long-term investor backing can help companies navigate the roadblocks and setbacks that inevitably crop up along the way.