AFraxis CEO Outlines Biotech’s Success With Ultra-Lean Pre-Clinical R&D in Russia

Xconomy San Diego — 

AFraxis, a mostly stealthy San Diego biotech, is getting ready to come out with a big announcement in the next week or so, but CEO Jay Lichter previewed some key parts of the story yesterday during a presentation before the San Diego Venture Group. He says the biotech has completed pre-clinical testing of a promising compound for treating a form of autism related to Fragile X syndrome.

Lichter, who does double duty as a managing partner of San Diego-based Avalon Ventures, founded aFraxis in 2007—shortly after researchers identified a possible drug target for Fragile X, a family of related mental disorders caused by a defect (or multiple defects) in a single gene on the X chromosome.

Of course, finding a compound that fits a single molecular target (the way a key fits into a lock) is no simple matter. The process can require screening millions of compounds, and then researchers must determine if candidate compounds are reasonably safe for initial use in humans and show the relevant pharmacological activity that justifies commercial development.

“The goal is to make a single exploratory compound and test it in a mouse, and we’ve done that,” Lichter says. The aFraxis CEO didn’t provide a lot of new details about the science. The target, which was identified at MIT in Nobel laureate Susumu Tonegawa’s laboratory, is PAK, a specific group of enzymes that catalyze neural reactions. Lichter says the same mechanism appears to be in play with schizophrenia. As Denise reported earlier this month, Fragile X Syndrome, which is the most common known cause of autism, is believed to be caused by defects in the gene that produces this group of enzymes.

Lichter’s presentation was instead focused mostly on the ultra-lean company-building approach aFraxis has taken to get this far. After three years, he says the biotech has only a handful of employees, and Avalon has invested a total of roughly $6 million to basically get to a stage where the company could submitt an application to begin clinical trials. “We started from scratch from a paper in PNAS (Proceedings of the National Academy of Sciences,” Lichter says.

The pre-clinical research was done in record time—and at a savings of roughly $4 million—by joining forces with Torrey Pines Investment, Lichter says. Torrey Pines Investment, a San Diego life sciences investment firm, happens to own a full-service contract research organization near Moscow. AFraxis plans to begin tests in Russia in 2011 to evaluate the drug’s safety in humans, Lichter says. If all goes as planned, he says tests in Fragile X patients in Moscow will follow.

Nicolay Savchuk, a Russian-born mathematician and director of Torrey Pines Investment who also participated in the presentation, says his firm uses its ties with the Moscow-based Chemical Diversity Research Institute to focus “on the gap where [potential drug] compounds are and where they need to be.” Savchuk says his firm likes to invest in potential drug candidate “assets” and use its R&D capabilities to produce “data packages” that provide the validation necessary to eventually turn its assets into drugs.

Savchuk says the deal with Avalon and aFraxis was “unusual and out-of-the-box thinking” made possible because “Jay was very seductive” and offered Torrey Pines an opportunity to make a direct investment in aFraxis. In exchange for an equity stake in the San Diego biotech, Savchuk says his firm guaranteed to cover the costs of the pre-clinical research and development that was done by the Russian CRO.

“I would not say it’s a one-size-fits-all model,” Savchuk says. “But it is a way to do more.”

Lichter added that he personally reviewed the capabilities of the Russian CRO, and was deeply impressed by the institute’s “top-notch’ capabilities in medicinal chemistry, biology, and related fields of drug research and development. He says he also was assured by the fact that Savchuk lives and works “just down the street.” Lichter says the Russian CRO’s cost was competitive with Asian firms, but that Savchuk’s personal involvement was a crucial factor—and a principal reason why Lichter could not envision doing the same work with an unfamiliar CRO in India or China.

“There’s something to be said about good neighbors,” Savchuk agreed. “We saw these target-to-clinic capabilities [that we have] as a convenient way to de-risk [biotech] investments. It made sense to us and our partners to streamline costs as much as possible.”