How Boragen Banked $10M to Develop New Boron-Based Fungicides

Xconomy Raleigh-Durham — 

No matter what pharmaceutical companies throw at bacteria and fungi, the microorganisms find ways to get ahead. Their ability to mutate and reproduce quickly gives rise to new generations resistant to anti-infective drugs. Fungal resistance also troubles farmers, but they’ve had few new crop treatments to choose from, in part because agricultural technology investment has lagged drug research funding.

That is starting to change, says Tony Liu, chief scientific officer at agtech startup Boragen, which has raised $10 million in funding. With that Series A investment round, the Research Triangle Park, NC-based company aims to develop new fungicides that overcome the problem of chemical resistance. It’s the first investment made by AgTech Accelerator, which launched last year to help nurture promising new technologies for the farming sector.

“Pathogen resistance is an unmet and growing need in ag, and becoming quite urgent,” says Liu.

The Boragen deal might not have happened if not for earlier work done with the technology in pharmaceuticals.

Boragen is working with boron, a chemical that fungi have not yet developed resistance to, says Liu. Boron is already familiar to farmers, used mainly in fertilizers. It’s a micronutrient essential for plants to complete their life cycle, according to agriculture research from University of Minnesota Extension.

But boron has been difficult to use for much else because scientists didn’t know how to work with the chemical reactivity of boron atoms, Liu says. That knowledge has developed over the last decade through research into human health applications of the chemical.

The Boragen technology comes from the laboratories of Stephen Benkovic, a professor of chemistry at Pennsylvania State University. Benkovic co-founded Anacor Pharmaceuticals, a Palo Alto, CA-based company whose drugs employ boron chemistry.

The breakthrough for boron in human health was the development of ways to “fine-tune” the chemical to improve how much of a drug circulates in the body to produce a therapeutic effect, says Liu, who spent more than two years in Benkovic’s Penn State lab as a postdoctoral researcher. Scientists also figured out how to curb side effects related to boron. Anacor went on to develop and commercialize boron-based drugs that treat eczema and toenail fungus. Last year, Anacor’s portfolio and pipeline caught the acquisitive eyes of Pfizer (NYSE: PFE), which plunked down $5.2 billion to buy the company.

Benkovic is now one of Boragen’s board members.

John Dombrosky, CEO of AgTech Accelerator, says Boragen aims to translate the knowledge and intellectual property surrounding boron-based drugs into new products for agriculture. With the AgTech Accelerator investment, he says the company will be able to do that work faster.

Late last year, the AgTech Accelerator closed on a $20 million fund, which it planned to invest in startups through deals ranging from $1.5 million to $3.5 million. The accelerator’s vision was identifying promising early stage agtech research at universities, providing funding, and developing the technology to a point where it could leave the accelerator backed by financial support from venture capital firms.

But the accelerator’s own investors were so enthusiastic about the potential of Boragen’s technology that they decided to invest more money in the company from the start, Dombrosky says. Of the $10 million raised by Boragen, AgTech Accelerator put in $3 million. The $7 million balance came from the accelerator’s investors—Alexandria Venture Investments, ARCH Venture Partners, Bayer, Elanco Animal Health, Flagship Pioneering, Hatteras Venture Partners, Mountain Group Capital, Pappas Capital, and Syngenta Ventures.

The investor group supporting both AgTech Accelerator and Boragen now includes the Bill and Melinda Gates Foundation. Dombrosky says the foundation is interested in ag startups as part of its support for technologies that could have global impact.

The Gates Foundation is already familiar with boron-based technologies. In 2013, it committed $17.7 million to Anacor’s efforts to develop drugs that treat neglected diseases. The foundation also bought a $5 million equity stake in the biotech. Dombrosky says Gates Foundation involvement will ensure that AgTech Accelerator companies think of how their technologies apply to the developing world.

Boragen aims to address a wide spectrum of fungal diseases affecting multiple crops. A Boragen fungicide would overcome fungicide resistance by killing the microorganisms in a different way than the current lineup of crop chemicals, Liu says.

It’s a growing area of interest for big agriculture companies. Last month, Bayer entered a fungicide partnership with Cary, NC-based Trana Discovery. The collaboration, which focuses on discovering chemicals that act on a key cellular process for fungi, aims to discover and develop new fungicides that are more effective than chemicals currently used on crops, yet also less harmful to the environment.

Dombrosky says the accelerator isn’t ditching its original model, which aims to seed three or four early stage companies each year. He says the accelerator can be flexible to adjust if a technology warrants a different approach and more money, such as Boragen.

The company is based at AgTech Accelerator’s RTP site and will have use of the office and business resources of the facility. Dombrosky will be Boragen’s CEO. With the new capital, Boragen will develop a lead candidate, as well as other products that could be used in both plants and animals. In a nod to the Boragen technology’s origins, the company might even pursue candidates for human health, Dombrosky adds.

To start, Boragen will hire six more scientists to help Liu build the company’s fungicide pipeline. Liu, who began working in drug research and never imagined that his career would take him into crop protection, says those hires will come from both the pharma and agriculture sectors.

“We’re looking to bring in people with different perspectives that can really drive innovation,” he says.

Photo by Flickr user fdecomite via a Creative Commons license.