Exalys Launches With $15M to Treat Postoperative Delirium & More

Xconomy San Diego — 

Venture capitalists like nothing more than pattern matching, and Domain Associates has identified one it especially prefers: licensing drug candidates from a Japanese biopharma and setting up a US company to move it through testing until Big Pharma starts nosing around.

It’s a roadmap the VC firm, which has offices in San Diego and Princeton, NJ, is looking to again follow with its latest investment: a $15 million Series A financing round that Domain and fledgling firm Catalys Pacific pulled together to launch Exalys Therapeutics.

The new San Diego-based biotech plans to move ahead three potential drug candidates licensed from Japan’s Eisai that target EP4, a known cancer target that also plays a role in neuroinflammation. Domain and Catalys, which launched in 2019 with offices in Japan and in San Francisco, co-led the financing round for Exalys.

Postoperative delirium is the first indication Exalys plans to go after. A complication that can follow surgery, the incidence of which increases as patients age, this form of delirium can prolong hospitalization, cause or accelerate cognitive decline, and result in a worsening quality of life.

“We’re essentially taking what would be considered a preventive approach, not treating it once delirium manifests, but instead trying to prevent postoperative delirium from ever taking hold in a patient,” president and CEO Rick Orr told Xconomy.

Exalys is evaluating which of the Eisai candidates to move ahead first, and plans to ask the FDA for permission to start human testing of the one it selects as its lead in the second half of 2021, he said.

The potential treatment would be given daily by mouth for a day or two prior to surgery, then for up to week afterward. The idea is to tamp down the activity of EP4 during and after the procedure.

“The surgical procedure is the trigger that would cause the neuroinflammatory response, so you’d want to have the drug on board, so to speak, and present during the time of surgery so it can have an impact as EP4 starts to have an effect, and you want to continue having that drug present,” Orr said. “Postoperative delirium in most patients is experienced for three to four days following surgery, so it’s not just a brief episode that lasts for a few hours and goes away, but typically lasts for several days.”

In clinical trials the company plans to focus on patients age 65 and older who are slated for surgical procedures that are more likely to lead to an episode of postoperative delirium, he says. The condition is likelier to arise following major operations, such as cardiac or abdominal surgery, rather than less risky procedures. The company also plans to use biomarkers to identify patients most likely to benefit. Exalys is also considering other neuroinflammatory conditions the EP4 antagonists could potentially address.

Orr has worked with Domain partners Eckard Weber and Dennis Podlesak for nearly 20 years. Their first foray was at Domain-backed Peninsula Pharmaceuticals, where Podlesak was CEO and Orr general counsel. Peninsula licensed assets from Japan’s Shionogi and developed them until Johnson & Johnson (NYSE: JNJ) came calling. J&J acquired the firm for $245 million in 2005.

Orr and Podlesak soon reunited in the same respective roles at Cerexa Pharmaceuticals, which moved ahead a drug candidate licensed from Takeda Pharmaceutical (NYSE: TAK) until it was snapped up by Forest Laboratories in 2006 for $480 million. Weber was on the board. After the Cerexa acquisition Podlesak joined Domain, and when he and Weber launched antibiotics developer Calixa to develop a drug candidate from Astellas Pharma, Orr joined as chief operating officer. Calixa was bought in 2009 by Cubist Pharmaceutics, which later merged with Merck (NYSE: MRK).

“We’ve got a long history of working together, building companies, successfully advancing compounds and ultimately transacting those companies,” Orr said. “In all of those companies what’s important to me, and I think to Dennis and Eckard as well, is that they went on to successful product approvals, so it’s good to see that you’ve selected sound science that is sufficiently interesting to large pharma that they pick it up and continue to advance the compounds.”

Most recently Orr was head of pain drug developer Adynxx (NASDAQ: ADYX), another Domain-backed company, which last year went public via reverse merger with Alliqua BioMedical. Adynxx founder and chief scientific officer Julien Mamet and Bill Martin, who handled corporate development, marketing, and commercial strategy, also made the move to Exalys, Mamet as CSO and Martin as executive vice president, corporate development and operations. The four-person operation will roughly double its headcount over the next 12 to 18 months, Orr said.

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