Immunotherapy Biotech Kiromic Considers San Antonio Move for Cash

Immunotherapy Biotech Kiromic Considers San Antonio Move for Cash

San Antonio — [Updated 5/31/18, 4:20 p.m. See below.] Kiromic, a Houston-based biotech company with artificial intelligence software that it’s using to develop two experimental cancer immunotherapies, may move to San Antonio—if it gets $200,000 from a city-operated economic development group.

The money isn’t free. In exchange, Kiromic will give the San Antonio Economic Development Corporation—an economic development-focused nonprofit corporation created by the San Antonio city council in 2010—$200,000 worth of preferred equity in Kiromic’s Series A round of funding (it didn’t disclose what percentage of total equity that is). Kiromic is currently trying to raise a $12 million Series A financing round to use toward operations and early clinical trials, according to the company’s president Scott Dahlbeck.

(Update: The city council approved the funding on May 31, and the next step is to await a decision from the company, which Ed Davis, executive director of the economic development group, says he expects in three to four weeks.)

The biotech was founded in 2012 and is aiming to train T-cells in the immune system to attack and destroy cancer—a branch of the increasingly crowded field of drug developers trying different ways to direct the body’s immune cells to fight cancer. Kiromic believes it can activate the killer T-cells to target specific markers in cancer cells, which could offer a more targeted approach than other immunotherapies.

From a patient blood sample, Kiromic takes a type of cell called mononuclear cells and matures them in the lab into dendritic cells, which start the body’s immune system response. The company then exposes, or “pulses,” the dendritic cells with an intended, specific target in the cancer cells that it wants the immune system to attack. The next step is to inject the mature dendritic cells back into the patient’s body, which increases the amount of dendritic cells the patient has. Those cells then find the T-cells and encourage them to attack the specific cancer cell target, Dahlbeck says. He adds that the targets are specific to a patient’s cancer type and medical history and he believes the treatment can destroy cancer cells without harming other cells.

Kiromic finds those targets, which are genes or proteins, using software it calls Kiromic Artificial Intelligence, or K.A.I. The A.I. system generates targets by analyzing a library of genes and proteins that Kiromic has developed based on public and proprietary data. The software can also be used to develop a therapeutic regimen, Kiromic says. After finding a target, the company tests the immunogenicity of a target, or the likelihood it’ll get an immune response.

Dahlbeck contends that the A.I. system is key to differentiating Kiromic from competing immunotherapy companies, because it can analyze 10 billion data points that the company has compiled from those public and private databases in order to predict effective targets. It’s Kiromic’s hope that this capability will improve the efficacy and safety of its cancer treatment.

“(Patient’s) cells are then trained specifically to activate the immune system response against this target of identified cells,” Dahlbeck says. “The ability to create a viable and potent vaccine that you’re giving back to the patient is unique to the company.”

Kiromic’s approach may be unique, but the company will still need to show that it’s effective in clinical trials. Kiromic is currently running four combined Phase 1 and 2 trials for its lead drug, an injectible treatment called BSK01, which some of the potential Series A round will pay for. It estimates it will enroll 23 patients in each. Dahlbeck admits that the $12 million round is a small amount, calling it conservative, and says the company plans to seek a larger Series B round after the current round closes, in hopes of boosting Kiromic’s valuation.

“Partly because when you’re developing your value as a company, and hitting various milestones, you want to have a lower ask earlier and a larger ask later so that way you have less dilution,” he says.

There are a few reasons, besides the $200,000 investment, that Kiromic is considering a move. Those include quality of life for employees and a less risky weather environment for a biotech, Dahlbeck says. (Hurricane Harvey devastated Houston last year, and barely missed San Antonio.) Officials in San Antonio have promised to introduce the company to other potential investors, he says. Also, all of the company’s clinical trials have a presence in San Antonio.

Though Kiromic already has a GMP manufacturing facility in Houston, Dahlbeck says it will need a new one when it begins taking its drug candidates into later-stage testing—another reason the business is considering relocating. The company’s second cancer drug candidate, BSK02, is an oral treatment in preclinical development.

Cancer immunotherapies have taken the drug development world by storm in recent years, ranging from checkpoint inhibitors to CAR-T treatments that use the immune system to hunt down cancers. The first two FDA approvals for CAR-T cell therapies came last year: one from Novartis (NYSE: NVS) and another now owned by Gilead Sciences (NASDAQ: GILD).

More recently, T-Cell receptor therapies (TCR) being developed by companies such as Cambridge, MA-based TCR² Therapeutics and Adaptimmune (NASDAQ: ADAP), which has offices in Philadelphia and the U.K., are using modified T-cells that seek out specific tumor targets, much like Kiromic’s approach.

Dahlbeck contends that the company’s A.I. system, and its ability to comb its public and private genomic and protein database, helps with any of the safety concerns of typical immunology therapies, such as the possibility that the engineered T-cells might attack normal cells. In the few patients treated by the company’s experimental approach so far, there hasn’t been any toxicity, he says.

“When you have a good target, and you’re accessing it through the dendritic cells, I think this is a very low risk route to take for dosing,” he says.

Dahlbeck wouldn’t disclose any of the specific cancer targets the company is currently pursuing, only calling them immunogenic “K.A.I.-direct targets,” after the acronym for his company’s A.I. system.

The San Antonio city council will vote on whether to approve the $200,000 investment at its May 31 meeting.

More healthcare companies have been turning to A.I. as a potential resource. Yesterday, GV, the venture capital arm of Google parent Alphabet (NASDAQ: GOOGL), added about $7 million to an existing Series A round for Owkin—a company that uses a machine learning tool to help medical researchers discover biomarkers and disease targets. A bevy of drug developers and technology companies, from IBM (NYSE: IBM) to GM (NYSE: GE), have been investing in uses of artificial intelligence for healthcare.

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