Want to raise a mountain of venture capital to pursue your biotech dreams in 2010? Do what Kevin Judice of Achaogen did. First, find some government agencies and charities willing to commit $100 million to your R&D, then see if the VCs will pull out the checkbook.
That’s what happened earlier this year for South San Francisco-based Achaogen. The company (pronounced uh-KAY-oh-jen) raked in a $56 million Series C venture round in April from Frazier Healthcare Ventures, Alta Partners, 5AM Ventures, Arch Venture Partners, Domain Associates, Venrock, Versant Ventures, and the Wellcome Trust. It was the seventh largest venture round of the second quarter in Northern California, according to Dow Jones VentureSource.
The big idea at Achaogen—also being supported by the U.S. Department of Defense, the National Institutes of Health, and the Wellcome Trust—is to create new antibiotics with ability to kill a broad spectrum of the craftiest bacterial invaders that resist existing drugs. The concept, when Achaogen was founded in 2004, was that antibiotic resistance was becoming a big problem in the hospital, and in the community. Partly because of overuse of antibiotics, about 70 percent of hospital-borne infections develop ways to resist one or more classes of drugs, according to the Centers for Disease Control and Prevention. That leaves doctors fewer arrows in their quiver against potentially deadly bugs like MRSA (methicillin-resistant Staphylococcus aureus), which tends to make public health officials nervous. An estimated 90,000 people die from bacterial infections every year, costing the health system $4.5 billion, Achaogen says.
So, it stands to reason that if a company could build a diverse portfolio of new drug approaches for multi-drug resistant invaders, there ought to be lots of money to be made. There was relatively little competition from Big Pharma, which, then and now, was more interested in bigger markets like cancer and diabetes. But unlike cancer, where curing the disease in mice doesn’t usually help predict what will happen in humans, antibiotics that work in animals have better odds of performing well in future human studies.
“I liked the idea of starting an antibiotics company,” says Judice, the company’s chief executive and chief scientist. “The need for more antibiotics was acute and growing as time passed.”
Judice, who trained under the prominent chemist Peter Schultz at UC Berkeley in the early ’90s, seemed like the guy to tackle this problem. Judice was one of the first 10 employees at South San Francisco-based Theravance (NASDAQ: THRX), an antibiotic developer. By 2003-2004, he had moved on to run a small-molecule chemistry group at Genentech. Nathaniel “Ned” David, along with Camille Samuels of Versant Ventures, pulled the people and concept together with Floyd Romesberg of The Scripps Research Institute in San Diego. The company went on to raise $42 million in its first two venture rounds. Judice joined in May 2004.
One of the ways Achaogen has sought to differentiate itself, compared with other antibiotic companies, is by being “platform agnostic,” Judice says. That means it will do what it takes to re-engineer an existing class of antibiotics, or mix up the dosing intensity or frequency to stay a step ahead of the bugs. It’s not just fixated on certain gram-positive or gram-negative bugs, but whatever strategy seems best to kill certain multi-drug resistant pathogens.
“It’s a bit oversimplified, but we’re in a bit of an arms race with the bacteria. They have a lot of defense mechanisms we have to overcome,” Judice says. “We’ll do anything it takes to win that battle.”
That means Achaogen’s scientists go after all sorts of chemical challenges, modifying different classes of antibiotics like aminoglycosides, beta-lactams, or fluoroquinolones. This is part of what makes Achaogen different from its competitors, according to Samuels, a member of the company’s board.
“Achaogen’s ‘special sauce’ is that it combines exceptional drug discovery/chemistry capabilities with unique insights into the clinical needs in antibiotic therapy,” Samuels says in an e-mail. “The latter is a particularly challenging skill to acquire in antibiotic drug development because developers are in the business of trying to predict future patterns of drug resistance. Because it takes so many years to get a drug on the market, antibiotic developers have to address not today’s problems but the problems that will be in emerging in 5-10 years. It really is a war between the bugs and us—and you have to be like a general strategizing about the bugs future moves based on epidemiology and clinical problems in certain, often remote, parts of the world … Whereas most companies focus on today’s obvious problems.”
It all sounds great and ambitious, but antibiotics, like all drugs, can be risky to develop. A number of antibiotic developers—San Diego-based Trius Therapeutics, Cambridge, MA-based Targanta Therapeutics, and Theravance, to name a few—have run into roadblocks and delays of various kinds in recent dealings with the FDA. And their delays happened in the late stages of development, after their drugs had already passed muster in mid-stage clinical trials, theoretically removing much of the technical risk of failure.
Achaogen hopes to avoid those snags partly by going the road less traveled in antibiotics, where there’s a strong need now and in the future, by treating gram-negative bacterial invaders. The company’s lead candidate, ACHN-490, is for multi-drug resistant gram-negative bacteria like E.coli and K. pneumoniae. The current crop of aminoglycosides are used against the gram-negative invaders, and are often effective. But they are limited in their dosing: because the drugs aren’t metabolized through the liver, they get cleared through the kidneys. An excessive dose can be toxic to the kidneys.
Scientists at Achaogen modified the absorption and distribution properties of the aminoglycoside in such a way that it would be easier on the kidneys, Judice says. By doing that, you could theoretically raise the dose, and knock down the bug before it has a chance to resist.
“We like to get in and hit them hard, hit them fast,” Judice says.
The data at this point is encouraging. Achaogen presented results from an early-phase study of 32 people last September at the Interscience Conference on Antimicrobial Agents and Chemotherapy in San Francisco. Researchers saw no sign of kidney side effects in a variety of doses when comparing the drug against a placebo. Those results laid the foundation for Achaogen’s more rigorous next step—a mid-stage clinical trial of a high-dose, once-daily, short-term course therapy. That trial, of 225 patients with complicated urinary tract infections, got underway in March and is expected to generate results in about a year, according to this posting on clinicaltrials.gov.
If Achaogen is really successful, its drug could reduce the amount of time people with infections have to stay in the hospital. Maybe patients will have their infections wiped out in 3-5 days, instead of 7-10 days or longer, Judice says.
If the company can deliver a drug like that, it could tap into a variety of niche markets worth $500 million to $1 billion. It might not sound like much if you’re a Big Pharma company with $50 billion in annual revenue like Pfizer, but it’s enough for a small company like Achaogen, with 65 employees, to think big.
And even though that potential has created enough sizzle to secure a whopping $56 million venture round, Judice told me he’s not looking to parlay that enthusiasm into a fast buck.
“We’re really focused on being our own company. We don’t want to sell it. We don’t want to flip it in two years,” Judice says. “We want to be a great company with superb focus. There’s important work to be done here. We drive to work thinking something we do today could save a lot of lives. It makes it easy to get excited.”
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