Had things turned out differently, scientists at Galecto might be watching their idiopathic pulmonary fibrosis drug candidate develop in the hands of a big pharmaceutical company. But Bristol Myers Squibb passed on its option to acquire Galecto leaving the biotech to forge ahead on its own. Now the company has $64 million to advance clinical development of its lead compound and others in its pipeline.
The financing announced Friday was led by Soleus Capital, which was joined by Eir Ventures.
Galecto develops drugs that target galectin, a protein thought to play a role in fibrosis, a disorder characterized by thickened and stiff tissue that leads to organ damage. The biotech has tested lead drug candidate GB0139 as a treatment for idiopathic pulmonary fibrosis (IPF), a form of fibrosis affecting the lungs. It’s a rare disorder that has no cure and few treatments. The Galecto drug, an inhaled galectin-3 inhibitor, is currently in Phase 2b testing. Galecto, which is based in Denmark and has an additional site in Boston, is also preparing for an anticipated conditional regulatory approval of the drug in the European Union.
In 2014, Galecto and Bristol (NYSE: BMY) inked a deal that granted the pharma giant an exclusive option to acquire the smaller company and gain worldwide rights to its IPF drug. Galecto was eligible for up to $444 million in option and exercise fees, and milestone payments tied to the drug’s clinical and regulatory development. Under the deal, Bristol could acquire Galecto at any time but no later than 60 days after the completion of a Phase 1b clinical trial. The biotech reported positive results from that study in 2017 but 60 days came and went without an acquisition.
The Galecto drug pipeline has since grown. GB1211, a galectin-3 inhibitor that comes in capsule form, is in early-stage clinical testing as a potential treatment for liver fibrosis associated with nonalcoholic steatohepatitis (NASH). Earlier this year, Galecto merged with San Diego-based PharmaKea. Financial terms weren’t disclosed but the combined company kept the Galecto name and added a PharmaKea compound that blocks LOXL2, an enzyme involved in the formation of fibrotic tissue. That drug, renamed GB2064, is being readied for Phase 2 testing in myelofibrosis, a type of bone marrow cancer.
Galecto is one of several biotechs with compounds in mid- to late-stage clinical development for IPF. Pliant Therapeutics (NASDAQ: PLRX) has advanced its lead drug to Phase 2a testing in the disorder. Pliant’s drugs are designed to block receptors for integrins, the same target that Morphic Therapeutics (NASDAQ: MORF) is addressing. Last month, AbbVie (NYSE: ABBV) exercised its option on a Morphic drug program that includes two compounds with potential applications in IPF. Last year, Gilead Sciences (NASDAQ: GILD) entered a multi-year, multi-drug partnership with Galapagos (NASDAQ: GLPG) that includes an IPF drug candidate in Phase 3 testing.
In a prepared statement, Galecto CEO Hans Schambye said that the company expects to have three Phase 2 tests underway by the end of this year. With the new capital, the company expects that its cash reserves will last until late 2022.
Galecto’s latest financing added new investors Cormorant Asset Management, Janus Henderson Investors, Hadean Ventures, Sphera, Asymmetry Capital Management, and Canica. Even though Bristol passed on the chance to buy Galecto it still owns a piece of the biotech and it joined in the latest round of investment along with other earlier investors including OrbiMed, Ysios Capital, Novo Holdings, HBM Healthcare Investments, Sunstone Capital, Seventure, and Maverick Ventures.
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