Atomico, a European venture capital firm, has helped persuade Cambridge, UK-based Healx to return to the capital market a year earlier than anticipated. The biotech has just raised $56 million in Series B funding to bankroll its mission to use AI and machine learning to create affordable rare disease treatments.
It is not surprising that venture capitalists have been knocking on the door at Healx. Having spent only half the $10 million it raised in a Series A round in the summer of 2018, Healx has applied its tech platform to identify and advance 10 drug programs towards the clinic. The most advanced, a combination therapy of two existing drugs, is set to start a pivotal Phase IIa trial at two US centers in early 2020.
Healx, which works closely with rare disease patient groups, intends to use the proceeds from the Series B round, which saw a term sheet signed within five weeks, to broaden its portfolio of rare disease programs to 50 candidates over the next 24 months. The company’s mission is to advance 100 rare disease treatments towards the clinic by 2025.
The new round was led by Atomico, a Euro-focused VC firm formed in 2006 by Niklas Zennström, a successful serial-entrepreneur and co-founder of Skype, Kazaa, Rdio, and other companies. The deal included new investors Intel Capital, the corporate VC arm of the tech giant, Japan’s Global Brain, and Germany’s btov Partners. All previous investors, including Balderton Capital, Amadeus Capital Partners, and Jonathan Milner also participated in the round.
Two key pillars to Healx’s ambitions are the pursuit of what company co-founder and CEO Tim Guilliams describes as a “hypothesis-free” approach and having a strong engagement with patient groups linked to rare diseases.
“We believe that part of the problem that the pharma industry has in developing new drugs is that often it starts with the wrong target-based hypothesis, and after doing lead optimization and preclinical testing find that it fails at Phase IIa. We have developed a hypothesis-free approach that does not start with a druggable target but lets the algorithms decide which diseases we work on and which compounds are matched. Only after that do we try to determine a mode of action and hypothesis,” added Guilliams.
Atomico has a track record of seeking out companies operating in frontier technologies. “We have seen several enablers in recent years looking to close the gap between biology and tech. We had been looking at opportunities such as computation-driven drug discovery and believe that AI and ML has potential to be transformational in rare diseases,” Irinia Halvas, Atomico principal and newly appointed Healx board member, told Xconomy.
“Looking at Healx, we concluded that the team was exceptionally strong. It has the interdisciplinary approach we look for, combining deep pharma industry know how with AI/ML capabilities… Looking beyond the AI outputs, we believe in the power of the platform to deliver real world benefit to patients,” she added.
Indeed, Healx’s desire to work closely with patient groups was an additional attraction for Halvas. The clinical protocol for the company’s Fragile X program is being developed in collaboration with the FRAXA Research Foundation. “We see patient groups as the disease experts, they know the clinicians and patient populations and can help us select the appropriate compounds and design the clinical protocols. Our main focus and commitment to these groups is to find effective treatments that are affordable,” added Guilliams.
To enhance its outreach to rare disease patient groups and help identify which conditions to focus on, Healx has launched its Rare Treatments Accelerator. The company has a new website with a first call for proposals and applications on November 15. Patient groups will be selected based on the answers to questions around existing data, animal models, clinicians, and potential endpoints.
To achieve its loftier ambition of advancing a total of 100 rare disease treatment candidates into the clinic by 2025, Healx will need to return to the capital market for a Series C round. Guilliams anticipates that this will be in 18 to 24 months.