NGM, Partners Seek Next Diabetes Drug Targets Among GI Tract Hormones

Xconomy San Francisco — 

NGM Biopharmaceuticals, led by veteran biotech innovators from Amgen, Genentech and Tularik, made a big bet five years ago that it could plumb the human digestive tract for new hormones and other agents that might help control metabolic disorders such as obesity and Type 2 diabetes. Private backers have put more than $76 million behind that vision. And now three pharmaceutical giants have lined up with their own endorsements, in the form of partnership deals that could hasten the company’s scientific progress.

The small private South San Francisco company announced a partnership deal this month with AstraZeneca’s biologics unit MedImmune, its third big collaboration in the last 15 months. Johnson & Johnson subsidiary Janssen Pharmaceuticals signed on in January, following a deal inked with NGM in March 2012 by Daiichi Sankyo.

“We’re delighted that the work we’ve done has been recognized by these three pharmaceutical companies,” says NGM’s CEO William Rieflin (pictured above). “They share our belief in the utility of our approach.”

NGM has been exploring almost uncharted territory in its search of the stomach and small intestine for regulatory molecules that send signals to the rest of the body about the type and quantity of nutrients passing through them. Such agents might be a key part of the regulatory network that, in healthy people, keeps tight control of the amount of sugar in the blood. Poor blood sugar control leads to diabetes and related disorders such as cardiovascular disease and nerve damage. Strong evidence of the potential role of GI tract proteins has emerged from the results of certain gastric bypass surgeries, which originated as weight loss treatments but have also restored blood sugar levels to normal in some patients who had previously needed to take insulin to stabilize blood sugar. NGM is pursuing insights generated from those surgeries.

NGM was built around relationships that go back for decades. It’s a sort of reunion among past players at Tularik—a South San Francisco oncology research leader that Amgen acquired for about $1.3 billion in 2004.

Rieflin, who was chief financial officer of Tularik, remembers it as a great place for biologists under the leadership of its CEO David Goeddel. Goeddel’s career as a seminal biotechnology innovator began in 1978, when he joined the then-fledgling startup called Genentech as the first scientist it hired.

Goeddel went on to co-found Tularik in 1991, and its “superstar biologist” was Jin-Long Chen, Rieflin says. Chen’s colleagues saw him rise through the ranks, and wondered whether he would follow Goeddel’s path and form a company of his own some day.

“This guy was such a force of nature,” Rieflin says. “A lot of us thought, if he ever wanted to do something we wanted to be part of it.”

Chen joined Amgen after it absorbed Tularik, but after several years he left to pursue his own ideas. What Chen wanted to explore was a novel way to develop treatments for obesity, diabetes, and related metabolic disorders, which have grown into a global health scourge. Chen had headed research units addressing metabolic disorders at both Tularik and Amgen, and he was interested in a little understood result of abdominal surgeries that rearrange the “plumbing” of the gastrointestinal tract to help morbidly obese people lose weight.

Almost immediately after certain forms of this bariatric surgery, many patients who had suffered from the dangerously unstable blood sugar levels associated with diabetes saw their blood glucose tests return to normal. This can happen before any significant weight loss occurs, and is not necessarily related to a change in food intake.

Chen wanted to find out whether these surgeries alter the output of hormones and other proteins from various regions of the GI tract. If so, it might be possible to isolate the agents that help re-establish blood sugar control, in an interplay with insulin and other known regulatory molecules. That would open the possibility of developing drugs that could mimic the benefits of bariatric surgery without the risks of an operation.

By the time Chen was ready to form a company, Goeddel was ready to arrange financial backing as a managing partner at The Column Group, a San Francisco venture capital firm. In 2008, Chen founded NGM as The Column Group co-led a $25.5 million Series A financing round with Prospect Venture Partners and Rho Ventures. Goeddel became chairman of NGM’s board. The following year, NGM added another board member with a solid spot in biotechnology history—Arthur Levinson, chair of the Roche unit Genentech, former Genentech CEO, and chairman of Apple’s board of directors.

Rieflin was an angel investor and consultant for NGM before he joined the company as CEO in 2010, when NGM also completed a $51 million Series B funding round. Over the past five years, scientists at NGM have created experimental in vivo models of bariatric surgery in animals to search for regulatory agents that either promote diabetes or help resolve it, Rieflin says. Once found, those agents can become targets for experimental drugs—either to bolster the effect of beneficial compounds or to thwart those that destabilize blood sugar levels.

Since surgery alone seems to spur changes that can help Type 2 diabetes patients get their blood sugar under control, some researchers have been conducting clinical trials assessing it as a routine treatment that might be superior to existing medications. But Rieflin says surgery involves risks on the operating table, as well as side effects such as the reduced absorption of vitamins and other nutrients. On top of that, the widespread use of expensive surgeries as treatments for Type 2 diabetes would bankrupt the health care system, Rieflin argues. About 25.8 million people have diagnosed or undiagnosed diabetes in the United States, according to the Centers for Disease Control and Prevention. Among adults with diabetes, as many as 95 percent have Type 2 diabetes.

Some drug makers have already developed diabetes drugs based on knowledge of hormones produced by cells in the gut as food passes through it. So-called incretin hormones such as GLP-1 (glucagon-like peptide-1) prompt the pancreas to produce insulin, which keeps blood sugar levels steady in healthy people. Amylin’s drug exenatide (Byetta), approved for certain patients with Type 2 diabetes in 2005, was the first drug designed to mimic the effects of GLP-1. Newer drugs in this class are Novo Nordisk’s liraglutide (Victoza) and Merck’s sitagliptin (Januvia.) Rieflin says NGM aims to discover drug candidates that could complement the drugs that mimic incretin, which he expects will continue playing a significant role in diabetes treatment.

In the complex regulatory network that controls blood sugar, he says, it’s not likely that a single compound is responsible for the entire benefit of bariatric surgery. NGM has identified a number of molecules of interest by focusing on a form of surgery called a Duodenal-Jejunal Bypass (DJB), which prevents food from flowing from the lower stomach directly into the duodenum—the first segment of the small intestine.This surgery improves blood sugar control without causing weight loss.

“It separates the two effects,” Rieflin says.

NGM scientists track the changes in gene expression before and after the food is re-routed to bypass the duodenum, which retains its nerves and blood supply. Several theories could explain the benefits of the surgery, Rieflin says. The duodenum may produce a harmful agent in response to food, or it may produce a molecule that promotes stable blood sugar when it is starved of food. Looking at it another way, food that has not passed through the duodenum may induce the release of beneficial compounds in the remaining sections of the small intestine.

In its partnership with Janssen, NGM is studying a set of protein factors with the goal of reproducing the benefits of bariatric surgery in diabetes patients. The company’s agreement with MedImmune is based on NGM’s work in isolating the rare enteroendocrine cells (EEC) from the GI tract. These cells produce almost all the known GI hormones, including GLP-1, according to NGM. But they also may produce hormones important to glucose control that have not yet been identified. NGM has discovered new types of enteroendocrine cells as well, Rieflin says.

Rieflin says he can’t reveal how NGM’s research platform led to discoveries that form the basis of NGM’s collaboration with Daiichi Sankyo. The partners agreed to work together to develop factors that could regenerate the insulin-producing beta-cells of the pancreas—a potential boon for patients with either Type 1 or Type 2 diabetes. Diabetes stems in part from a decline in beta-cell functioning.

The partnerships have provided upfront payments and financial support for NGM’s research, though the startup isn’t giving out exact numbers. Rieflin says the drug companies relieve NGM of the task of taking drug candidates through clinical trials, and allow the startup to concentrate on its core strengths in basic scientific discovery.

Rieflin sees significant opportunities for NGM to originate one or more successful products that could earn a share of the total $175 billion US market in medical care for diabetes.

“It’s a very big sandbox to play in,” he says.