Scholar Rock’s Local Approach to Immune Disease Nabs $20M

Xconomy Boston — 

With a pharma partnership already in hand and big biotech names on board, the Cambridge, MA-based startup Scholar Rock today announced a $20 million Series A round of funding.

With the cash, the company will continue its pursuit of antibody therapies that exploit a relatively new biological understanding of the way crucial proteins called growth factors behave in local disease environments within the body.

Scholar Rock is based on work from the Harvard Medical School labs of Tim Springer and Leonard Zon. Springer has a long track record of research and entrepreneurship that has turned into medicines, including the myeloma drug bortezomib (Velcade). He has remained close as an investor and board member.

The aim of the company is to alter the body’s release of growth factors in the “niches,” or biological areas, relevant to a specific disease, but leave them alone in other areas. Being more specific in this way could create therapies that avoid side effects. That theory remains unproven, but it’s already attracted a big partner. Scholar Rock in January signed a deal with Janssen Biotech, a division of Johnson & Johnson (NYSE: JNJ), that focuses exclusively on transformational growth factor beta 1.

TGF-beta 1 plays many key roles in the body, helping direct the fates and functions of various cells—it tells regulatory T cells to fight inflammation, for example—but it can sometimes get out of hand and create disease instead of fighting it.

The trick is to know when to help TGF-beta 1 do its job, and when to tamp it down. Scholar Rock’s new investors—ARCH Venture Partners led the round, with participation from EcoR1 Capital and The Kraft Group—believe the company is heading in the right direction. (Seed funders Polaris Partners and Tim Springer himself also joined the round.)

“A fundamental puzzle with classic TGF-beta 1 is that it’s expressed everywhere [in the body], and it seems to be involved in so many physiological phenomena and disease processes,” says CEO and president Nagesh Mahanthappa (pictured above). “Put aside how you’re going to find an avenue of therapeutic intervention. How can that even make physiologic sense?”

Targeting the growth factor itself—and there are many drugs that do—can lead to side effects; an antibody designed to knock out TGF-beta 1 would do so all over the body. (The idea of developing antibodies to knock out TGF-beta has been around a long, long time.) But Scholar Rock is leaning on new insights that the protein does not circulate like other proteins in the body, but is kept in a latent state—locked up, if you will—by other molecules.

“The body stores them in extracellular depots” waiting to become activated locally, says Mahanthappa. Very locally, it turns out: the growth factors work within the distance of a few cell diameters, he says.

The idea is to design antibody “keys” that interact with the surrounding molecular depots, either triggering release of the growth factors to do their job, or making sure they stay locked up, depending on the disease. Scholar Rock and its founders have teased out the structures of the surrounding molecules, and want to design antibodies to attach to them.

Janssen owns rights to immune-modulated indications that target TGF-beta 1, but Scholar Rock can still target TGF-beta 1 for fibrosis, wound healing, and certain cancers with programs it owns itself or licenses to other corporate partners. Its insights into niche modulation could extend to other growth factors, as well, although the data have been “most supportive” of the local activation theory in the TGF beta “superfamily” and the fibroblast growth factors, says Mahanthappa.

Mahanthappa told Xconomy he would like to identify a lead candidate in 2015, but there’s no public timeline yet to start clinical trials.

Scholar Rock’s new round is the first big deal for ARCH since the venture firm announced the closing of its eighth fund in late August. Kristina Burow, a managing director based in ARCH’s San Francisco Bay Area office, led the firm’s investment.

In addition to the Series A news, Scholar Rock made two personnel announcements. Elan Ezickson, formerly of AVEO Pharmaceuticals (NASDAQ: AVEO), has joined as chief operating officer and head of corporate development. And the company named Barry Coller of The Rockefeller University in New York and Akshay Vaishnaw of Alnylam Pharmaceuticals (NASDAQ: ALNY) in Cambridge, MA, to its scientific advisory board.

In January, Scholar Rock added two Boston-area biotech veterans to its board of directors: Editas Medicine CEO Katrine Bosley and Michael Gilman, formerly of Biogen Idec and Stromedix and now an entrepreneur-in-residence at Atlas Venture. Mahanthappa, Springer, and Polaris’s Amir Nashat round out the board.

As often happens in the biotech world, there are close connections between many of the people involved. Mahanthappa was one of the earliest employees at Alnylam, and later worked with Bosley at Avila Therapeutics, which they sold to Celgene in early 2012 for $350 million upfront.