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With Narrowed Focus, Elcelyx Prepares for Diabetes Drug Trial

Xconomy San Diego — 

For San Diego’s Elcelyx Therapeutics, 2014 may someday be remembered as “the year of heavy lifting.”

Since the fall of 2013, when Elcelyx spun out NaZura BioHealth as a sister company with the same management (focused on commercializing a dietary ingredient called Lovidia), the company has crossed off a variety of accomplishments that include:

—Selling NaZura BioHealth about a year ago in a deal that has not been previously disclosed. Elcelyx CEO Alain Baron said Elcelyx pocketed some proceeds from the sale, although he declined to provide details.

—Completing mid-stage clinical trials of Elcelyx’s drug candidate, a proprietary oral compound for patients with type 2 diabetes who cannot tolerate metformin, the first-line drug of choice for most of them.

—Securing about $6 million in funding last month from existing investors Morganthaler Ventures, Kleiner Perkins Caufield & Byers, Technology Partners, and GSM Fund. Including the latest funding, Baron said Elcelyx has raised a total of roughly $57 million over the past five years.

—Concluding what Baron described as “a protracted, but ultimately very productive conversation with the FDA” that has positioned Elcelyx for a final push in the development of its drug candidate.

“We’ve agreed on a path forward, and agreed on the studies we need to do,” Baron told me this week. “We’re confident that this is something we can do.”

Alain Baron

Alain Baron

Now Elcelyx is developing specific protocols for carrying out three late-stage studies that would involve a total of 1,500 to 2,000 patients—and considering the best way to fund them. Baron estimated the cost of completing Phase 3 trials would be almost $100 million.

Baron is not yet sure how the company will fund the late-stage trials, but he sees three options for the company: raising capital through an IPO; selling Elcelyx and its drug program to a pharmaceutical company with the wherewithal to complete the trials, or remaining private and raising enough capital for Elcelyx to carry out the late-stage trials itself.

Elcelyx was founded in 2010 with initial support from Morgenthaler Ventures, where Baron was an entrepreneur-in-residence.

From the beginning, the company had a dual-track strategy. One track called for advancing Lovidia as a nutritional supplement (with ingredients generally recognized as safe) that would help people lose weight by increasing the production of natural hormones in the gut that increase the feeling of satiety. After spinning NaZura out in late 2013, the team intended to begin online sales of Lovidia capsules in mid-2014, with retail distribution planned for this year.

The spinout had the added benefit of narrowing the business focus at Elcelyx, which would make a buyout of Elcelyx more straightforward. Of course, selling NaZura simplified things even more.

The other track at Elcelyx involved the development of a “delayed-release” version of metformin—intended for use by patients with type 2 diabetes who literally cannot stomach existing formulations of metformin.

According to Baron, about 40 percent of the patients with type 2 diabetes cannot take metformin, either because of adverse side effects that include severe nausea, vomiting, and diarrhea, or because the patients’ impaired kidney function leads to a condition known as metformin-associated lactic acidosis.

The Elcelyx CEO estimates that some 8 million Americans have one problem or the other. The 3.6 million who have impaired renal function are also subject to an FDA “contraindication” notice, which usually precludes doctors from prescribing metformin. Baron said much of the company’s talks with FDA regulators last year was focused on the type of studies and data that would be needed to ease the regulatory restriction.

The problem, Baron explained, is that existing formulations of metformin dissolve in the stomach, where the drug is absorbed into the bloodstream and acts systemically. In contrast, the delayed-release formulation of metformin passes through the stomach, and is designed to stay in the intestines, where the drug mostly acts locally, Baron said.

As a result, Baron said the dosage required for delayed-release metformin is about half the dose of conventional metformin—and the amount of metformin in the bloodstream is reduced by 75 percent.

“It’s an old drug that’s been completely reinvented to meet an unmet need,” Baron said. And if everything proceeds according to plan, he said, the new formulation of metformin could be approved for use in the United States in less than five years.

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One response to “With Narrowed Focus, Elcelyx Prepares for Diabetes Drug Trial”

  1. zoom says:

    I’m quite disappointed with this company. Who bought NaZura? Why is the internet void of any information? They kept claiming this product would be easy to market, so again…. what happened here?