Alcresta Grabs Another $10M to Boost Nutritional Supplements

Xconomy Boston — 

People with stomach cancer often have trouble keeping their weight up. Despite taking nutritional supplements like Boost or Ensure, patients just can’t properly digest and absorb the needed calories and nutrients.

But what if you could boost a Boost to fix the problem? This is the type of answer that Alcresta, a Newton, MA-based startup, may be roughly a year away from having in the form of a tangible product.

Alcresta is announcing today that it has secured a $10 million Series B equity financing from existing investors Bessemer Ventures, Third Rock Ventures, and Frazier Healthcare. The group teamed up to provide Alcresta with a like-sized Series A last year, bringing the total amount it has raised so far to $20 million.

Importantly, the cash allows Alcresta to chart a course to potentially bring its first products to hospitals and pharmacy shelves next year—assuming it can win the necessary approvals from the FDA.

Alcresta’s plan is to capitalize on the idea that premature babies and patients with certain rare or chronic diseases, like cancer, have trouble digesting the long-chain, or “good” fats contained in baby formulas (in the cases of preemies) or nutritional drinks because they lack the biological machinery to do so—namely, the digestive pancreatic enzymes that help break down fat.

These fats, such as omega-3, omega-6, and others, help support the immune and cardiovascular systems, and in the case of preterm babies, are needed to help develop and grow. Absence of these fats can lead to weight loss, malnutrition, or worse.

Certain cancer patients, for example, might not be able to handle chemotherapy if the body isn’t healthy enough, and could be forced into using a feeding tube to stabilize weight. Other times, patients might take large numbers of porcine pancreatic enzyme pills to make sure the body is getting those nutrients.

Alcresta is creating an alternative to this—a line of products that can add a microbial enzyme to the mix that breaks down those fats so patients can digest them.

“These people need more calories simply to go through chemotherapy or radiotherapy, not to mention other things, and they cannot do that, because they do not get this machinery,” Alcresta CEO Alexey Margolin says. “We have a simple solution to restore this machinery which is lost or otherwise not fully developed.”

When Xconomy last profiled Alcresta in 2012, it hadn’t really identified what that solution was in a tangible way. Today, executives gave me a peek into what they’re making.

Alcresta President Robert Gallotto (left) and CEO Alexey Margolin (right)

Alcresta has two product ideas up front. The first is meant for patients who can’t swallow and are being nourished via a feeding tube, such as preterm babies. The device is what Margolin described as a small cartridge, or filter, that would break down the fats in the formula or nutritional supplement on its way to the body so the patient can digest the nutrients right away.

The second idea is meant for those who can swallow, but need help absorbing the calories and such from nutritional supplements like Boost or Ensure. Margolin described this application as something that looks like a teaspoon with the same filtering technology in it. Alcresta is calling it the “Mixi Stick.” The patient mixes the drink with the disposable teaspoon for anywhere from 10 to 30 seconds, breaking the nutrients down to their absorbable form before they’re swallowed.

“It’s what your pancreas would do for you if you were healthy,” he says.

Alcresta will initially target those products towards people with certain types of cancer—stomach cancer, colorectal cancer, liver cancer, or pancreatic cancer, for instance—as well as those with cystic fibrosis, or rare diseases like short bowel syndrome. Annually, more than 250,000 people in the U.S. are diagnosed with those four cancer types and about 30,000 are diagnosed with cystic fibrosis, according to Robert Gallotto, who was promoted from chief operating officer to president as part of the financing announcement.

Alcresta plans to eventually roll its products out for other groups, such as preterm babies, the elderly, or people with diabetes. Gallotto says, for instance, that 22 percent of non-diabetics over 65 have some form of pancreatic deficiency.

“Malnutrition or malabsorption, particularly of fats, is a big problem in that patient population,” he says. “There are different touch points, so it provides a lot of opportunity.”

Alcresta plans to sell the products to hospitals, pharmacies, and other outlets, initially in the U.S. before expanding internationally with the help of a commercial partner.

In the meantime, Alcresta will use its latest financing haul to finish developing the two products, make sure it has the necessary data behind it to show the FDA its product works, do some hiring, and line the products up to be sold to patients with specific diseases. Margolin didn’t detail the regulatory pathway or the clinical work Alcresta has done or is planning, but says that the company has been “working closely with the FDA” and hopes to have regulatory approval for its first product by the first quarter of 2014.

Alcresta hasn’t spent its first round of cash as of yet, according to Margolin, which puts it in position to make a quick turnaround as a company on just $20 million in venture cash—a pittance compared to the capital-intensive nature of a traditional biotech, or even medical devices company.

“It’s a very efficient space, and it lets you get to value inflection points without that tremendous need for huge capital raises,” Gallotto says. “We’re pretty comfortable we have enough money internally to deal with what we want to, to get to the market and get us quickly to a break-even perspective.”

Alcresta isn’t ruling out any potential strategic options at this point, be it an IPO, acquisition, or partnership. But as Alcresta knows, it has to get its products on store shelves first before those truly become options.

“That’s what creates the value, exactly,” Gallotto says.