Cydan Development, New Enterprise Associates’s orphan drug startup accelerator, has taken a look at around 600 assets since it was formed some three years ago. Sifting through all these potential drugs for diamonds in the rough has been an exhaustive process, perhaps even more so than the firm’s executives expected.
“It takes longer to de-risk [these assets] than we initially thought,” says CEO Chris Adams.
Yet the work Cambridge, MA-based Cydan has done is now beginning to lead to a portfolio of companies. Today, it’s announcing the launch of a startup called Imara with a $31 million Series A round and a plan to develop a drug for sickle cell disease. Imara is Cydan’s second startup, following Gaithersburg, MD-based Vtesse, which raised $25 million when it was formed in January of last year. Adams says two more Cydan startups could be launched in the next 12 months. If that pans out, the accelerator could have a total of four startups supported with the $26 million initial stake Cydan raised in 2013 from NEA, Pfizer Venture Investments, Alexandria Real Estate Equities, Bay City Capital, and Lundbeckfond Ventures.
Time will tell if this strategy will work. Cydan’s goal is to accelerate the development of rare disease drugs and as a result, generate returns for investors by selling these startups or taking them public. The hope is that these startups are just a few years away from generating the type of data that could lead to, say, a buyout. Vtesse has a drug for a rare condition called Niemann-Pick Type C1 disease in a trial that’s expected to wrap up by the end of next year, according to clinicaltrials.gov. And Imara’s $31 million round is expected to fund its drug, IMR-687, through human proof-of-concept studies in both adults and children with sickle cell. The trials should also produce data by the end of 2017. If the data are good, Cydan will have options going forward. Adams notes the “optimal outcome” would be selling these startups outright.
NEA formed Cydan in 2013 as part of a plan to put together a small group of experts to scour the globe for promising projects in rare diseases, sift through them, find some winners, and form companies around them. The idea of doing this isn’t entirely novel—other venture firms also start rare disease startups, and large pharmaceutical companies are always looking for promising drugs to move forward. But Adams and chief scientific officer James McArthur (who is also Imara’s CEO) contend there are a few things that make Cydan different. One is that it has a syndicate of investors on standby to finance the development of the projects it finds worthy. Second, they say, is the speed at which Cydan can go through different programs, test them, decide what to invest in, and choose the projects to kill.
“That is the model—killing [projects] fast for as little capital as you can,” Adams says.
McArthur says, for instance, that if Cydan wants to dig into a project, it signs an option to license the asset and then puts anywhere from $1.5 million to $2.75 million into it to run a series of tests and advance it. That work is outsourced, through a group of contract research firms that Cydan regularly works with (Cydan itself only consists of six people). Adams says Cydan has invested its own cash in 16 of the roughly 600 total assets Cydan has looked at, and killed off ten of those programs. For the ones that turn into startups, Cydan’s principals—as in, Adams, McArthur and the rest of its team—get some equity for their efforts. Cydan’s backers then step in with the investment cash, as they did with Imara, and get lion’s share of the stock.
Cydan finds these assets from a variety of places. With Vtesse, for instance, VTS-270 was already being tested in a National Institutes of Health-sponsored Phase 1 study (here’s more on that from the Wall Street Journal); Vtesse had licensed the experimental drug from the NIH. Other times, as with Imara, Cydan advances “assets on paper,” Adams says. That is, molecules that have been synthesized by a drug maker, but haven’t been tested yet.
Danish pharma firm H. Lundbeck A/S had synthesized hundreds of different molecules that inhibit an enzyme called phosphodiesterase 9 (PDE9). Lundbeck had thinking about these drugs as potential treatments for neurological diseases like Alzheimer’s (as have others, including Pfizer), but recent research (such as this 2014 paper from the journal Blood) has suggested they might be useful as a treatment for sickle cell, in which the bone marrow produces abnormal “sickle” shaped red blood cells that can get stuck in the bloodstream and block blood flow.
Since Lundbeck is a neurology-focused company, it has no interest in sickle cell. It gauged Cydan’s interest in developing a treatment for the blood disorder, and offered a list of “literally four sheets of PDE9 inhibitors” to choose from, McArthur says. Cydan took eight, began synthesizing them, and whittled the numbers down until it came up with what’s being called IMR-687. Imara has full rights to the drug, a pill that is meant to prevent the “sickling” of blood cells and the resulting outbreaks of pain that occur they clog up blood vessels. Lundbeck would get milestones and royalty payments if the drug progresses.
This is just one of several sickle cell treatments in development, along with a gene therapy from Cambridge-based Bluebird Bio (NASDAQ: BLUE), and drugs from the San Francisco Bay Area’s Global Blood Therapeutics (NASDAQ: GBT) and San Diego-based Mast Therapeutics (NASDAQ: MSTX). Gene editing approaches with CRISPR-Cas9 are advancing as well, as my colleague Alex Lash reported last year.
Pfizer even has a rival PDE9-blocking drug for sickle cell in Phase 1 testing though McArthur contends that Imara’s drug has an advantage. The Pfizer drug, PF-04447943, gets into the brain, and Imara’s IMR-687 doesn’t. Pfizer’s drug was originally tested in Alzheimer’s—where diffusion into the brain would be an asset—but it failed a Phase 2 trial. A sickle cell treatment should be different, McArthur says.
“Do you really want to be inhibiting PDE9 in the brain of kids and babies and young adults? Probably not,” McArthur says. “[That’s why] we specifically selected a drug that could not get into the brain.”
Still, given all the competition, Cydan faces an uphill battle to show it’s made the right bet with Imara. If it can, it could be easier for Cydan to go back to its investors to fund its next round, and create its next batch of startups. Adams notes that Cydan itself has enough cash to get to mid-2017, but discussions are already underway about what’ll come next, and what the next iteration of Cydan will look like.
“The first time we raised money, this was a white space,” he said. “Now we have a track record, a pipeline, and a knowledge base.”