Enumeral Raises $21.5M, Heads to the OTC Via Reverse Merger

Xconomy Boston — 

(Updated, 8/5/14, 9:10 am ET) Enumeral Biomedical started up a few years ago around a new way to help scientists measure how the body responds to infection and disease. Today, with a few partnerships and in-house drug candidates under its belt, the Cambridge, MA, and New York-based startup is heading into the public markets to move forward.

Enumeral has executed a reverse merger with a shell company called Cerulean Group and raised $21.5 million by selling 21.5 million of its shares to investors at $1 apiece. Each share Enumeral has sold came with a warrant to buy another share for $2 at some point over the next five years. Montrose Capital Partners led the financing, which also included participation from founding investor Harris & Harris Group. Enumeral will now trade over-the-counter under the ticker symbol “ENUM.”

Enumeral started up in 2011 around the work of MIT chemical engineering professor J. Christopher Love, who developed a technology called “protein microengraving,” which is meant to enable scientists to scrutinize the cells of people who have had a certain disease and identify the antibodies that help fight it.

Specifically, Enumeral isolates antibody-producing cells from blood and other tissue samples, puts them in tiny chambers, introduces “antigens,”—substances that provoke the immune system—and then measures the antibodies that each cell produces in response.

(Updated w/CEO comments) Enumeral has been pitching the method as a quicker and more effective way to find ideas for antibody drugs than more traditional methods, like studying bioengineered mice. That hasn’t been proven as of yet, but Enumeral got some early backing from New York-based Harris & Harris, and the company says it’s got some early proof-of-concept deals in place with four pharmaceutical companies testing its approach. Enumeral CEO Arthur Tinkelenberg wouldn’t identify the pharmas his company is working with, but says that the company has received “a mix of cash and asset ownership” in those agreements, and that they’re a mix of antibody discovery, vaccine research, and immune profiling projects. Enumeral’s goal is to turn these deals into larger collaborations, in which its partners would use Enumeral’s platform across a “wider spectrum” of projects, he says.

Enumeral is also using its method to develop its own antibody drugs in-house, and is homing in on checkpoint inhibitor protein targets—molecular switches that otherwise cloak tumors from the immune system—like PD-1, OX40, and LAG-3, all of which have been a big focus of research and dealmaking dollars in the pharma world of late. Enumeral hasn’t nominated any drug candidates as of yet, but Tinkelenberg says that the company hopes to have preclinical data on its first program early next year, with data for the next two coming in the second half of 2015.

Enumeral also aims to use its discovery method in infectious and inflammatory diseases.

Merging with shell companies isn’t the traditional, or preferred way for startups to get access to the public markets—it’s not as splashy or as validating as an IPO, for instance. But several companies who have done so have eventually gone on to trade on bigger exchanges like the Nasdaq. New York-based Retrophin (NASDAQ: RTRX) did it last year. And Cellectar Biosciences of Madison, WI, is attempting to follow, to name a few. Enumeral says that the cash, and potential future access to the public markets, will help it develop its own drugs and try to form some more drug discovery deals.

Tinkelenberg adds that Enumeral has been capital efficient so far, and hasn’t needed to raise much venture dollars—just $11.2 million to date—to progress. Because it didn’t need the large sum of cash typical in an IPO to move forward, Enumeral chose a reverse merger instead.

“This path was an attractive way for us to access the additional capital needed for the next phase of our growth,” he says.

Tinkelenberg, a former molecular geneticist from Rockefeller University, co-founded Enumeral along with Merck veteran Barry Buckland.