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Sutro Biopharma Grabs $36.5M in Venture Deal to Make “Biobetters”

Xconomy San Francisco — 

The buzzphrase “biobetter” is starting to catch on, and South San Francisco-based Sutro Biopharma is the latest to cash in on the trend, as one of the companies hoping to develop drugs with nifty new properties that were never seriously considered before.

Sutro is announcing today it has raised $36.5 million in a Series C venture round led by Skyline Ventures and joined by a couple new corporate investors—Lilly Ventures and Amgen Ventures. Existing backers SV Life Sciences and Alta Partners also participated. The company, formerly known by the geeky name of Fundamental Applied Biology, has now raised $59.5 million since it was founded in 2004.

The big idea at Sutro is to develop a new process for making biologic drugs that doesn’t rely on incubating specific strands of DNA inside living cells. Instead, Sutro is crafting a biochemistry-based method in which genetically engineered drugs can be synthesized in a way that’s faster, cheaper, and more consistent—similar to the way classic “small-molecule” pharmaceuticals are made by big companies like Pfizer and GlaxoSmithKline.

While the underlying technology is critical, the aim here is to use this method to make drugs that have better properties. So Sutro really aspires to enter the emerging class of what some people call “bio-betters” which have clear advantages over existing drugs, like Genentech’s souped-up breast cancer antibody, called T-DM1, or Seattle Genetics’ potent new antibody against rare lymphomas. A few other venture-backed companies—San Diego-based Ambrx, Seattle-based Allozyne, and Cambridge, MA-based Eleven Biotherapeutics—are also working to engineer ideal new properties into protein drugs. The market for biologic drugs is estimated to be worth more than $60 billion, according to Ernst & Young.

“The industry has really recognized that biologics are going to be the driving force from a commercial standpoint for the foreseeable future, and there’s a lot of investment in the area,” Sutro CEO Bill Newell says.

Sutro was founded based on technology from James Swartz’s lab at Stanford University. Much of the early work has focused on how to engineer protein drugs so they don’t have some of the weaknesses of today’s treatments made in living cells, Newell says. Traditionally, DNA gets inserted into the nucleus of a bacterial or mammalian cell, nourished in a nutrient broth in an industrial fermenter, and over time, the cells start secreting the desired protein therapeutic. The process takes a lot of time, money, and purification steps to make sure the drug comes out in a consistent form.

Sometimes these complex 3-D protein drugs emerge from the process without folding the same way. Sometimes carbohydrates end up hanging off the protein backbone in strange ways. Or the proteins end up aggregating together, which changes their properties as drugs. Any of that can introduce inconsistencies that lead to side effects.

Sutro’s protein engineers have been working on ways to eliminate some of those problems with existing protein drugs, which Newell didn’t identify. He also wouldn’t say which therapeutic fields the company is concentrating on, or when its lead product candidate might be ready for clinical trials. While some companies try to modify proteins by attaching polymers to “pegylate” them and make them stable and longer-lasting in the blood—which translates to fewer injections—he said Sutro is thinking bigger. “We’ll go beyond pegylation to altering properties,” Newell says.

The company has already inked “several” early partnerships with big drugmakers which it can’t disclose, Newell says. But armed with the new cash, Sutro is now in position to close on two more collaborations it does plan to announce in the next six to 12 months, he says.

This is all very early, and Sutro has a lot of work ahead. The plan will be to create protein drugs in batches with greater consistency, higher yields, and with a process that is easily reproducible from drug to drug, and factory to factory—which isn’t always that easy in traditional biotech manufacturing. The company’s efforts so far have primarily gone toward creating a library of protein drug candidates for testing, and it will need to show it can actually produce these drugs consistently at larger scales.

I asked Newell whether there could be any extra hurdles with the FDA, given that this is a protein manufacturing process that no one else uses for a marketed product today. The plan, he says, is to get the FDA familiar and comfortable with its methods early in the game, so that there aren’t surprises later on when the stakes are even higher.

For now, the Sutro platform is encouraging protein engineers to start thinking about things they dreamed of back in the industry’s first wave of the ’70s and ’80s, but which were quickly written off as impractical. “We are enabling people to go back and dust off the notebooks, and explore some very interesting protein engineering concepts. We’ll find out if some meaningful therapeutics can be harnessed,” Newell says.

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One response to “Sutro Biopharma Grabs $36.5M in Venture Deal to Make “Biobetters””

  1. Congratulations on assembling a blockbuster VC syndicate in the current and uncertain economic environment. Hopefully biotech is finally making a comeback.