Classic elements of a big biotech story are brewing in a little startup in South San Francisco called Vega Therapeutics. There’s leading-edge science from big names at the University of Michigan and UC San Diego. A proven management team from the Bay Area. If everything comes together, there is potential to shake up the standard of care for millions of people with Type 2 diabetes.
Venture capitalists haven’t pulled out their checkbooks yet. Few have shown much interest in starting new biotech companies like Vega since the Great Recession struck two years ago. Even so, to hear executive chairman John “Chip” Scarlett and CEO Craig Parker talk, VCs will enter this picture soon enough. For now, Vega is still at the four-people-with-cardboard-boxes-laying-around-a-bare-office stage, at least when I stopped by to visit a couple weeks ago.
“This is an old-fashioned, from-the-ground-up, hard-core discovery biotech, and there aren’t very many of those getting funded today, because of the conditions of the markets,” Scarlett says.
Vega, which hasn’t talked publicly about its plans until now, started last December. That was a few weeks after Scarlett sold his most-recent company, South San Francisco-based Proteolix, to Onyx Pharmaceuticals (NASDAQ: ONXX) for $276 million upfront and potentially another $535 million more based on the success of a drug it developed for multiple myeloma. Scarlett teamed up with a couple of key colleagues from the Proteolix experience, Craig Parker and Raheleh (Rah) Mansoor, to start a company. Parker, through his connections on an advisory board to the University of Michigan, was well aware of a big idea emerging in the labs of Alan Saltiel, the director of the U-M Life Sciences Institute. And Scarlett, an endocrinologist by training, was once a fellow in the lab of one of Saltiel’s key collaborators, Jerrold Olefsky at UC San Diego.
The big idea, which has been gaining currency for years in the scientific literature, is that inflammation is one of the major culprits causing problems for people with Type 2 diabetes. This chronic condition, in which people lose their ability to control blood sugar, can lead to all kinds of complications like heart attacks, strokes, blindness, nerve damage, and amputations, to name a few. An estimated 25 million people in the U.S. have diabetes, and as the obesity epidemic rages on, the incidence of diabetes is expected to double over the next 25 years.
There are lots of drugs today that work through different ways. Some reduce the amount of sugar the liver releases into the blood, others help the body secrete more insulin naturally, or people can just get regular insulin replacement therapy via injection.
Vega has a different strategy for fighting diabetes. By blocking the excessive inflammation that occurs, it hopes to stop the destructive process that leads to the worst complications of diabetes—like heart attacks and strokes that ultimately kill people, Scarlett says.
“The bet here is not that we’ll have something a little bit better or a little safer, or you use a little less insulin. It’s about attacking the underlying disease,” Scarlett says.
The research is still at an early stage, at least by corporate biotech standards. Saltiel’s research has focused on a biological target called IKK epsilon, which was described in a September 2009 paper published in Cell. When this gene was deleted in mice, the mice were protected from getting chronic inflammation of the liver and fat tissue. They were also able to avoid becoming resistant to insulin. And they were able to avoid getting fat after eating a high-fat diet.
The target itself is a protein kinase, which is important because that means it ought to be possible to make a conventional orally-delivered small molecule drug to block it. Vega is just in the early … Next Page »