Genetix Pharma Raises $35M from Third Rock, Genzyme for Gene Therapy

Xconomy Boston — 

Venture capitalists are giving the risky field of gene therapy a new dose of confidence—and cash. Genetix Pharmaceuticals, a 17-year-old developer of gene therapies, has replenished its coffers with a $35 million Series B round of venture capital.

The Cambridge, MA-based company attracted the fresh capital after a study in France showed that one of the firm’s gene therapies blocked the progression of a debilitating brain disorder called adrenoleukodystrophy (ALD) in two children. This is the disease that was featured in the acclaimed 1992 film “Lorenzo’s Oil,” the true story of a husband and wife who searched for a cure for their son with the crippling illness. While much testing will be required to bring the gene therapy to market, Boston’s Third Rock Ventures and Cambridge-based biotech giant Genzyme were convinced that there was enough promise in the data to make big bets on the company.

Third Rock and Genzyme Ventures, the venture unit of Genzyme (NASDAQ:GENZ), are the new investors in Genetix’s second-round financing, according to the company. The round includes investments from the firm’s previous VC backers Easton Capital, Forbion Capital Partners, and TVM Capital. The new funding came with major management changes at Genetix: Third Rock partner Nick Leschly is leading the firm as interim president; Phil Reilly, a venture partner at Third Rock, has become chief medical officer; and Mitchell Finer, a veteran biotech executive, is the new chief scientist. Genetix CEO Alfred Slanetz is leaving the firm.

Gene therapies, which typically use viruses to deliver healthy genes into cells to treat diseases, have never been approved for the market nor lived up to the hype they initially generated about two decades ago. Genetix is one example of renewed faith in the science in some scientific and investor circles. The company, one of hundreds like it that formed in the 1990s to develop gene therapies, was recapitalized in 2004 and licensed technology from the French National Institute for Health and Medical Research. The French scientists who developed that technology have generated headlines around the world for its use to cure ALD in two high-profile cases.

“We’re at that same point that we were with monoclonal antibodies 12 to 15 years ago,” Finer, Genetix’s new chief scientific officer, says. “You look and see the resurgence of gene therapy data. We are poised to capitalize on those advancements.”

Genetix, which has now closed $75 million in funding since its inception, adds its own twist to gene therapy. Rather than injecting its therapies directly into patients, the company treats patients’ own bone marrow after it has been extracted from them. Once the firm’s treatments have corrected the genes in patients’ bone marrow stem cells, the cells are infused back into the patients to cure their illness. To deliver healthy genes to cells, the company uses viruses derived from deactivated HIV that are designed to die off after their job is done.

Patients with ALD typically die within 10 years after symptoms start to appear, according to the National Institutes of Health. Genetix aims to enter pivotal trials with its ALD therapy in the U.S. and France, with the exact timing partially depending its talks with the FDA and other regulators, according to Leschly. He didn’t say what questions the pivotal trials will have to answer in order for Genetix to win FDA approval for its gene therapy.

The company is also in early-stage development of a gene therapy for the genetic blood disorder thalassemia, which causes the formation of abnormal hemoglobin in blood cells. Leschly says the firm’s technology could lead to treatments for many other diseases, including many genetic disorders that currently require frequent enzyme replacement therapies—the sort of drugs that Genzyme markets today.

In ALD, which usually strikes boys during early childhood, bone marrow transplants have been effective in holding back the disease’s devastating symptoms such as the deterioration of brain function. Genetix’s treatment could treat the majority, or about 70 percent, of ALD patients, for whom there are no matching donors to give them bone marrow transplants, according to the company.

Genetix itself is now getting the Third Rock treatment, which is typically an infusion of both fresh capital and members of the venture firm to run the operation on an interim basis. This formula has been applied to other biotech companies in the three-year-old venture firm’s portfolio, including Boston-area biotech startups Agios Pharmaceuticals, Constellation Pharmaceuticals, and Eleven Biotherapeutics. Genetix is much older than other companies to get investments from Third Rock’s maiden fund of $378 million, but the company won the firm’s confidence with its strong clinical data, Leschly says.

On the other hand, it’s no surprise to see Genzyme in the mix at Genetix. Genzyme, which is the world’s largest provider of enzyme-replacement drugs for genetic diseases, has been pursuing gene therapy research consistently since the early ’90s without a late-stage product to show for it. The firm’s most advanced gene therapy is one in Phase I trials for Parkinson’s disease. Leschly says that Genzyme is only a financial investor in Genetix and has no rights to its intellectual property, yet the biotech powerhouse obviously wants to keep tabs on Genetix’s progress.

Amid the excitement around the firm’s recent progress, Leschly knows that Genetix has much more work to do before its treatments are available to patients. “There is a sense of humility around here; we do understand that this isn’t going to be a cakewalk, not all things are going to work, and patients aren’t going to have access to this tomorrow,” he says. “These are early data, but they are a launching pad, and we’re very excited about that.”

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