With $43M, Nimbus Sheds “Discovery” Tag, Heads to First Clinical Test

Xconomy Boston — 

It’s always a big moment when a biotech makes the turn from lab experiments to real clinical testing. A startup from Cambridge, MA, is celebrating that turn with a name change, a shift in strategy, and a $43 million round of financing from three pharmaceutical companies.

That startup is Nimbus Discovery, formed to use computer software to discover drugs, as its original name suggested. As of today, however, it’s Nimbus Therapeutics. It’s using the $43 million B round to move its lead drug program, for an increasingly common liver disorder known as nonalcoholic steatohepatitis (NASH), into its first clinical trial.

The name change is emblematic of a big strategic shift for Nimbus. When it was first formed in 2009 with funding from Atlas Venture, Schrodinger, and Bill Gates, the company was structured as a limited liability company, or LLC—basically a holding company. That would make it easy to sell off individual drug candidates to buyers only interested in a single program. A few other New England biotechs, like Adimab and Forma Therapeutics, have done this as well; these structures were good ways for VCs to generate quicker exits and shareholder returns in biotech during the capital crunch when the IPO window was slammed shut.

Likewise, Nimbus aimed to discover new drugs, find buyers for them, and reap the financial rewards.

“It was an experiment of sorts,” says CEO Don Nicholson (pictured above, photo courtesy of Jon Chomitz Photography). “And the experiment has gone in a very favorable way. But not the way it was originally designed.”

Indeed, times have changed. Money has flooded into biotech over the past few years, IPOs have become an option again, and in Nimbus’s case, it liked what it was seeing from its own in-house programs. It didn’t want to just sell or partner those drugs off before generating potentially valuable data. So Nimbus, after several years without a chief executive (executive chairman Dan Lynch was running it), hired former Merck executive Nicholson as CEO in September, and it started thinking of itself as a therapeutics company, not just a discovery team for hire. The company, for instance, isn’t looking for a partner for its lead drug right now.

“It became fairly obvious to us that the company could do a lot better if it held onto some of those assets and started progressing them into the clinic itself,” Nicholson says.

Nimbus has not ditched the LLC structure, which still gives the company dealmaking flexibility. It can to do a typical licensing deal for an upfront payment and milestones, or fashion a prenegotiated buyout for a single program, as it has done through a deal with Monsanto, Nicholson says.

The difference is Nimbus will now develop its own drugs, rather than depending on “high throughput partnering on very early programs,” as Nicholson says. It’ll use its Series B cash to bring the NASH drug through Phase 1 trials on its own. The goal is to get the drug into Phase 2 testing in “very early” 2016, Nicholson says.

Nimbus was formed via a strategic partnership with Schrodinger, a developer of computational drug-discovery tools. Nimbus was given exclusive rights to harness that technology, which is meant to help scientists understand how drugs bind to specific molecular targets and quickly and efficiently screen through millions of molecules that might work on those targets. The hope is by using this technology, Nimbus could discover and design drugs to get to targets that traditional chemistry approaches have not been able to crack.

One of those targets is what’s known as Acetyl CoA Carboxylase, or ACC. It’s an enzyme that regulates the creation of fatty acids, and thus is implicated in a number of important metabolic functions such as blood sugar regulation and fat buildup. It could be useful for several metabolic disorders like diabetes and obesity. But attempts to target ACC with a drug haven’t worked so far. Most recently, for instance, Pfizer dropped an ACC inhibiting drug for diabetes, Nicholson says.

According to Nicholson, it’s tough to design a drug that tightly binds to ACC. Nimbus believes it can succeed where others haven’t because it has designed what’s known as an “allosteric” inhibitor for ACC. This means rather than focusing on the area where ACC directly interacts with other molecules—the “active” site—to start a chemical reaction, Nimbus’s drug is targeting a different region—the “allosteric” site—which Nicholson likens to a “volume control” for the enzyme. By binding to this part of the enzyme, a drug can theoretically shut down ACC and the fat buildup it can cause in the liver.

Nimbus is using this approach to go after NASH, a leading cause of cirrhosis and liver failure. NASH occurs when fat builds up in the liver, typically due to sugary and fatty diets, leading to inflammation, scarring, and potentially liver transplants if unchecked. About 16 million folks in the U.S. have the disease, the worldwide market is expected to grow to $1.6 billion by 2020, according to a report from Allied Market Research, and there are no approved treatments for it.

No surprise, then, that a number of biotechs and large pharmaceutical companies have barreled into NASH research, among them New York-based Intercept Pharmaceuticals (NASDAQ: ICPT), Foster City, CA-based Gilead Sciences (NASDAQ: GILD), and France’s GenFit.

Indeed, the NASH market has become closely watched on Wall Street. When a Phase 2b study for Intercept’s drug, obeticholic acid, was stopped early last year because of unexpectedly good results, shares skyrocketed more than 200 percent. Intercept has since become one of the most volatile biotech stocks on Wall Street and it leads the NASH chase, awaiting regulatory guidance on the structure of a Phase 3 trial.

Nimbus thinks it can compete based on its drug’s mechanism, says Nicholson. Unlike other mechanisms being used, blocking ACC solves the “underpinnings” of NASH, stops the fat from building up in the liver, and may do so with fewer side effects, he says. That’s the Nimbus hypothesis—“all to be determined,” he cautions. (Intercept’s drug has been tied to some elevation of “bad” cholesterol levels, for instance, although those effects so far appear manageable.)

Nicholson also thinks the large size of the NASH market will leave “a lot of room for different therapeutic approaches.”

“There’s an awful lot of proof that needs to come out of clinical studies before the community really knows what is going to be the best mechanism overall,” he says. “Of course we’re backing our horse, but we’re backing it with what we think is an intelligent approach for treating the disease.”

Pfizer Venture Investments and Lightstone Ventures led the $43 million round, which was oversubscribed and included participation from all of Nimbus’s Series A backers—including Atlas, SR One, Lilly Ventures, and Gates. Nimbus has now raised some $67 million in venture cash since its inception. It’s also got three other preclinical programs in development for certain cancers and inflammatory diseases.