Applied Molecular Plots IPO to Back Transport of Biologic Drugs to Gut

Xconomy San Francisco — 

The human gut hosts a hub of activity spanning the immune system, the nervous system, and more. But drugging this nexus comes with challenges. Applied Molecular Transport is developing biologic drugs that use a cell’s own mechanisms to get a therapy to a target and the biotech is now planning to tap the public markets to finance more tests of its technology in humans.

Applied Molecular set a $100 million goal for its IPO, according to paperwork filed with securities regulators. That figure is expected to change but the South San Francisco-based company needs a capital infusion of some amount soon. According to the IPO filing, the company had $16.1 million in total cash at the end of the first quarter of this year.

Biologic drugs—which are made from cells, proteins and peptides—are already available to address autoimmune, inflammatory, and metabolic disorders. But Applied Molecular says in its filing that these injectable drugs are given in high doses to ensure a therapy reaches its intended destination and that these high doses raise the risk of toxic effects. That’s because these drugs circulate throughout the body, affecting healthy tissue beyond the drug’s target.

According to Applied Molecular, the main hurdle for delivering oral biologic drugs to the gut is the intestinal epithelium (IE), a protective layer of cells lining the gut that blocks proteins and peptides. The company says it has identified pathways that microbes use to cross this barrier, and it’s exploiting them to deliver its experimental biologic therapies. The key to these pathways is cholix, a protein that has the ability to cross the IE barrier and target immune cells in gastrointestinal tissue, the company says. The Applied Molecular technology creates a “fusion protein” that has sequences of the cholix protein as well as a therapeutic payload. Applied Molecular says its technology platform can design oral biologics made from peptides, protein, full-length antibodies, antibody fragments, and RNA.

Applied Molecular’s lead drug candidate, AMT-101, is being developed as a potential treatment for ulcerative colitis. The therapy uses an engineered version of interleukin-10, an anti-inflammatory protein, as the therapeutic payload. The company says clinical trials by others have tested systemic delivery of IL-10 in Crohn’s disease, another inflammatory gut disorder, but the research was stopped because of toxic effects. Applied Molecular’s oral biologic is made by fusing IL-10 with the engineered protein that delivers the payload across the IE barrier.

“We have designed AMT-101 to cross the IE barrier while not entering the bloodstream, thereby focusing the drug directly at the site of action of the underlying biology of the disease in the [gastrointestinal] tissue and, therefore, potentially avoiding the side effects observed with systemic administration,” the company says in its filing.

In a Phase 1a test in healthy volunteers, Applied Molecular says the drug was well tolerated by patients, who did not experience the toxic effects associated with systemic dosing of IL-10. In Phase 1b, the drug was tested in patients with ulcerative colitis. After 14 days of treatment, the patients showed a reduction in the signs of the disease, the company says.

The FDA has cleared Applied Molecular to proceed to a Phase 2a study testing AMT-101 in patients who have moderate-to-severe ulcerative colitis. That trial is slated to start in the second half of this year, according to the filing. Preliminary data from the study are expected in the second half of 2021.

The next compound in Applied Molecular’s pipeline, AMT-126, employs interleukin-22 to address problems with IE barrier function. In preclinical testing, the company says the compound reduced intestinal inflammation and sparked an increase in indicators of IE barrier repair.

Applied Molecular says it will use proceeds from the IPO to finance mid-stage clinical development of AMT-101 and to continue development of AMT-126. The cash will also support additional research.

The company was founded by CEO Tahir Mahmood and Chief Scientific Officer Randall Mrsny in 2010. Since its incorporation, Applied Molecular says it has raised $105.6 million. Epic Capital Group is the largest shareholder with a 25.9 percent stake, according to the filing. Founders Fund holds a 20.7 percent stake.

Applied Molecular is seeking a listing on the Nasdaq exchange. If the company completes the IPO, it expects to trade under the stock symbol “AMTI.”

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