Accelerate Long Island’s main mission has been to turn the science at its nearby research institutions into full-fledged companies with venture investors of their own. With a small funding round being announced today, Codagenix has become the first one of those projects that can make that claim.
Codagenix has raised a $2 million Series A round from Topspin Fund, a fund managed by Roslyn, NY-based VC firm Topspin Partners. It’s a small sum of money for a biotech startup developing therapeutics—in Codagenix’s case, vaccines—but it’s nonetheless a noteworthy development for life sciences in Long Island.
That’s because Codagenix is the first Accelerate LI grad to subsequently land a Series A round from a VC firm. The program’s graduates so far include seven life sciences and cleantech startups: Codagenix, Goddard Labs, Green SulfCrete, PolyNova, Traverse Biosciences, SynchroPET, and, most recently, a startup called Right Dose.
For those unfamiliar with Accelerate LI, it’s a broad collaboration launched in 2011 by several of Long Island’s big research institutions (like Cold Spring Harbor Laboratory and Stony Brook University) and several other participants invested in the local startup scene, with the goal of commercializing the science at these universities. It’s backed by grant money from the state of New York and some equity financing from local VC firms like Topspin and Jove Equity Partners. The program helps seed startups, mentor entrepreneurs, and steer them forward.
Codagenix was introduced to Topspin through Accelerate LI, and chief operating officer J. Robert Coleman calls the $100,000 in funding his startup got through the program “crucial” to move forward. Codagenix had been working with NIH grant money, but there are limitations to that—the funding couldn’t be used for things like taking steps to protect intellectual property.
“In the biotech space especially, they’ve provided a key bridge to letting [technology] come out of the universities,” Coleman says of Accelerate LI. (Accelerate LI doesn’t take equity stakes, but its cash converts to debt if a startup were to leave New York.)
Codagenix’s Series A funding doesn’t mean success, of course. As a vaccines startup, it faces a host of challenges. Vaccines are typically expensive and complex to manufacture and test in clinical trials, yet the price companies can charge for them is low compared to many other drugs. That makes vaccine approaches a tougher sell to investors, especially compared to therapeutics that can command sky-high prices and huge margins.
Coleman says he recently met with a large pharma business development scout who said, “Oh, I didn’t know VC [firms] were investing in pre-clinical vaccine companies.” That anecdote shows “the uphill battle we have that is out there, especially in our space,” Coleman adds.
It’s also why some of the innovation in the space has centered around cost-effective methods of manufacturing. A startup called Affinivax, for instance, uses what it calls “affinity tags” to produce vaccines quicker than the norm. Visterra and Genocea Biosciences (NASDAQ: GNCA), among others, also have their own methods.
Codagenix’s method—which comes from the work of three current and former Stony Brook professors, including Coleman—is a twist on the traditional “live attenuated vaccine” approach, in which viruses are weakened and injected into the body. Codagenix uses computer algorithms to create viruses with genomes that are altered in some specific way, and then uses those blueprints to genetically engineer synthetic versions of those viruses from scratch. The idea is that this process would create a virus identical to those found in nature, and yield vaccines that trigger immune responses in a broader range of people.
“That’s what we think our differentiation is,” Coleman says.
Coleman also notes that Codagenix’s approach could produce effective vaccines at a much lower dose than the norm—meaning they’d be cheaper and easier to produce, particularly in, say, a pandemic.
That’s the theory Codagenix is trying to prove. It’ll use the cash to start an early-stage study for its first candidate, an influenza vaccine, likely next year, Coleman says. It’s also moving out of its initial incubation space in Stony Brook and heading over to Broad Hollow Bioscience Park—a complex on the Farmingdale State College campus that used to be home to what was once Long Island’s biggest biotech success, OSI Pharmaceuticals. (Astellas Pharma bought OSI for $4 billion in 2010, but shut it down three years later).