Immune Design Follows Corixa Playbook, Sees Data, Deals on the Horizon in Year Three

Xconomy Seattle — 

Steve Reed is following a tried-and-true road map for building a biotech company. First year, build the team. Second year, gather some data to support the founding idea. Third year, prove it in clinical trials. Then start coaxing Big Pharma to open up its checkbook and do deals.

“This is when it gets exciting,” Reed says. “That’s just what happened at Corixa.”

Reed was talking about the growth strategy at his latest startup, Seattle-based Immune Design. The company made news yesterday when it raised $32 million in its second round of venture financing, from a big name crew of investors outside the Northwest—ProQuest Investments, The Column Group, Alta Partners, and Versant Ventures.

Immune Design was founded with an $18 million venture round from the last three investors a little more than two years ago, in June 2008. The company’s vision is to create a new generation of more specific, potent vaccines. In theory, these vaccines could provide lasting protection against infectious diseases with a single shot, or could be used to re-direct the power of the immune system toward an internal invader like cancer cells.

The technology builds on research from the Caltech lab of Nobel Laureate David Baltimore, who created a viral vector that makes it possible to specifically stimulate dendritic cells of the immune systemare known for sending sentinel warning signals about pathogens throughout the immune system. That targeting ability is being combined with synthetic chemical compounds called adjuvants, which boost the effectiveness of vaccines. These adjuvants from Reed’s lab at the Infectious Disease Research Institute (IDRI), when combined with Baltimore’s precise delivery system, offer an opportunity to trigger highly potent and specific immune responses in the body, as I described in yesterday’s breaking news story.

Steve Reed

Steve Reed

Immune Design plays its cards very close to the vest, so I was eager to stop by Reed’s office yesterday for a download on the company’s progress the past couple years, and what enabled them to raise a healthy sum like $32 million.

Reed, of course, has been here before. He founded the nonprofit IDRI in 1993 to pursue his dreams of fighting global health scourges. Soon thereafter, he connected with Immunex co-founder Steve Gillis to start a for-profit venture, Corixa, with the idea of raising private money and bringing business discipline to some of his vaccine work. Corixa struggled to market its lone cancer drug, although it successfully developed adjuvants that are now incorporated into GlaxoSmithKline’s vaccine for cervical cancer, marketed as Cervarix. Corixa was ultimately sold to pharmaceutical giant GlaxoSmithKline for about $300 million in 2005.

While Corixa went away, Reed went back to innovating in the adjuvant world with his team at IDRI. The earlier generation of adjuvants, known as MPL, were made from natural products, which made them a little more tricky and expensive to manufacture. The next step was to isolate the specific component of the MPL compounds that appeared to be closely related to sparking an immune response, and then make that component through a synthetic chemical process that would be cheaper, consistently reproducible, and scalable. That technology was went into Immune Design, through what it now calls GLA.

Like in the early days of Corixa, Reed sensed this program would wither in academia, and it really needed private investment dollars and a business focus and discipline to really move forward into a useable product. As he says, getting the team in place was vital.

Reed started out as the founding CEO, and originally agreed to spend 80 percent of his time team with the startup, devoting the rest to his research and administrative duties at IDRI. This makes him an extremely busy guy, especially since he’s traveling the world to global health conferences, and he’s frequently invited by politicians to offer advice on vaccine policies. In fact, Reed just finished co-authoring a strategy paper requested by President Obama on this very question, in the wake of the H1N1 outbreak from a year ago.

So, assembling the right 25-person roster was critical in the early days. At the highest levels, Reed is getting help from Bruce Carter, a part-time executive chairman of the board, a local biotech pioneer who has a golden Rolodex from his many years as CEO of Seattle-based ZymoGenetics (NASDAQ: ZGEN). Tom Dubensky, a former R&D leader at Anza Therapeutics and Onyx Pharmaceuticals, was brought in as chief scientific officer. The newest recruit is chief business officer Sammy Farah, formerly a scientific liaison at Merck and a member of the biotech investing team at Versant Ventures—one of Immune Design’s backers.

Immune Design isn’t saying a lot yet about the data it has gathered to support its founding idea. For now, the GLA adjuvant and the lentiviral vector system from Caltech are being developed on parallel tracks, with an eye toward eventually merging the delivery capability and the increased potency. So far, the GLA adjuvant has been added to a standard flu vaccine, and run through a clinical trial in people over the age of 65, who often don’t mount a strong enough response to flu vaccine to fight off the pathogen. That trial wasn’t statistically designed to prove the adjuvant-boosted vaccine works better, but it did demonstrate the adjuvant was safe and able to trigger an immune response at a couple different doses.

That study was an important bit of proof for the concept of the adjuvant, Reed says. The trial laid the groundwork for Immune Design’s next step, which is to incorporate the adjuvant into an internally-developed vaccine for an undisclosed infectious disease. The flu vaccine trial was critical to earning the confidence of investors to ante up in a second round, and it has sparked dialogue with Big Pharma partners that have the money to speed up the development process.

Immune Design is currently in “advanced negotiations” with a Big Pharma partner that wants a license to incorporate the GLA adjuvant into vaccines for specific uses, Reed says. He said he hopes to announce that deal soon.

Further back in the pipeline, Immune Design is working to reproducibly make the lentiviral vector system at commercial scale. That work has been progressing well enough that it should be poised to enter its first clinical trial in 2011, Reed says.

The plan is to use that lentiviral system to specifically stimulate dendritic cells, a certain cell type made famous by Seattle-based Dendreon (NASDAQ: DNDN). While Dendreon made headlines this year with the first-ever FDA approved drug that actively stimulates the immune system against cancer, biotech entrepreneurs like Reed see ways to advance the field much further. The Dendreon process requires the dendritic cells be stimulated outside the body, and re-infused into the patient after they have been stimulated to fight prostate cancer cells. Immune Design hopes to create a simpler product, that’s essentially a targeted lentiviral vector, combined with a protein marker on cancer cells, and an adjuvant for extra immune-stimulating kick. This could be formed into an injectable therapy, without the hassle of blood draws, and re-infusions.

Certainly, Immune Design benefitted from some good timing. The H1N1 global pandemic last year created a real sense of urgency among governments and Big Pharma companies to find a way to stockpile vaccines for a worst-case scenario. That instantly thrust Reed and his team into top policy circles, because their adjuvants could be a cost-effective strategy to inoculate many more people than health authorities can today. Adding adjuvants to the existing vaccine manufacturing processes could greatly increase potency, and allow officials to use much lower doses. That means that many more people could get immunized without forcing Big Pharma companies to spend the time and money on building new vaccine factories.

The increased urgency helped Immune Design secure a $3 million biodefense contract to do some further testing of its adjuvant, the kind of “non-dilutive” financing that venture capitalists like to see. Reed, who just turned 60, says the company’s progress reminds him of those early days at Corixa, which went on to do multiple partnerships and an IPO.

“I’m really excited about this company,” Reed says. “We have a great team, and great technology.”