Auris Medical Gets $51M for Hearing Disorder Drugs
By Cormac Sheridan
In one of Switzerland's and Europe's largest biotech private equity deals for some time, Auris Medical AG landed CHF47.1 million (US$50.8 million) in a Series C funding from the two Sofinnovas, Sofinnova Ventures and Sofinnova Partners, to take forward its two lead drug candidates, AM-101 and AM-111, in acute tinnitus and acute inner ear hearing loss, respectively.
The Basel, Switzerland-based firm plans to start recruiting 600 patients with acute peripheral tinnitus into two placebo-controlled Phase III trials, one each on either side of the Atlantic, later this year. "We're currently in an SPA [special protocol assessment] process with the FDA," Thomas Meyer, founder and managing director of Auris Medical, told BioWorld Today. "We expect to have the data in 2015."
The company will consult further with regulators before finalizing plans for AM-111, a dextrorotatory peptide that blocks c-Jun N-terminal kinase (JNK) signaling, in acute hearing loss, but a Phase II/III trial could also get under way before year-end, he said. Auris in-licensed the drug from Xigen SA, of Epalinges, Switzerland, which is developing the compound in several other indications.
AMI-101 is an N-Methyl-D-aspartate receptor antagonist intended to dampen the excessive signaling to the brain that occurs with tinnitus. "It's a problem of aberrant excitation of the auditory nerve," Meyer said. The drug is delivered locally, via intratympanic injection, a repeatable outpatient procedure routinely performed under local anesthetic by ear, nose and throat (ENT) specialists, he added.
Meyer has a drug delivery background he was previously CEO of insulin pump specialist Disetronic Group, which Basel, Switzerland-based Roche Holding AG acquired in 2003 and he established Auris in the same year after acquiring an inner-ear catheter device for drug delivery to the cochlea, the snail-like structure that contains the sensory hearing organ. "I was intrigued by the complete lack of licensed drugs for ear disorders," he said.
Meyer invested CHF8 million of his own cash in the company, with the intention of focusing on disorders for which animal models were available. Both acute tinnitus and acute hearing loss can be induced in experimental settings, which enables preclinical proof of concept to be established. Moreover, they can also be more easily assessed clinically than can progressive hearing disorders, in which hearing loss is gradual.
"We picked conditions where patients are acutely aware that they have a problem; they can tell when it happened," he said. Given the underdeveloped state of the field, however, historical data and published guidelines were not available. "We had to develop a lot of things from scratch," Meyer said.
Tinnitus is a subjective experience, which makes objective measurements of improvement in terms of reduction in loudness difficult to attain. "We're relying on patient-reported outcomes," Meyer said. "In tinnitus, what we are aiming for and what we could show in the Phase IIb trial is patients experiencing a reduction in the subjective loudness of the tinnitus." The upcoming trial also will assess the effect of AM-101 on secondary endpoints, such as sleep disturbance, a significant problem for tinnitus sufferers.
Acute hearing loss is more straightforward, in terms of measurement, but assessing any drug-associated improvement can be complicated by spontaneous recovery. In a Phase IIb trial, AM-111 did demonstrate a clinically meaningful benefit a 10 decibel recovery in patients with severe to profound hearing loss but not in those with less severe problems. "We were unable to show it in mild to moderate cases, because the spontaneous recovery was too strong," Meyer said.
Auris has not yet decided on a commercialization strategy, should its drug candidates gain regulatory approval. In the U.S., its potential audience comprises about 9,000 ENT specialists. The figure is about half that in Germany, another major market. "It doesn't really take huge armadas of sales and marketing people out in the field to work that market," Meyer said.
Otology is largely virgin territory. There are no licensed drugs for tinnitus in the U.S., while in Europe drugs with a thin evidence base are licensed in a limited number of regional markets. Both Auris and its new investors take the view that the field could take off, in much the same way that ophthalmology has during the past decade.
"We found this a very attractive investment opportunity as a result of it being the most advanced and leading company in the world with drugs to treat hearing disorders," Jim Healy, managing partner at Sofinnova Ventures, of Menlo Park, Calif., told BioWorld Today. "We believe, with some conviction, there will be a new focus and emphasis on developing drugs for otology and hearing disorders."
Several other firms operating in that area have raised funding in recent years, including London-based Autifony Therapeutics Ltd., a spinout of London-based GlaxoSmithKline plc, which raised $16.4 million to develop ion channel modulators for treating hearing loss and tinnitus.
Otonomy Inc., of San Diego, raised $48.5 million in two funding rounds in 2010. Its lead compound, OTO-104, a sustained-release formulation of the steroid dexamethasone, has completed a Phase Ib trial in Ménière's disease, a condition associated with hearing loss, vertigo and tinnitus. Sound Pharmaceuticals Inc., of Seattle, is in the clinic with SPI-1005 with ebselen, a mimic of glutathione peroxidase, which protects the inner ear from sound-associated damage.
Basel-based Novartis AG twice extended a hearing loss research collaboration and license agreement with vaccine developer GenVec Inc., of Gaithersburg, Md. MedGenesis Therapeutix Inc., of Victoria, British Columbia, is developing a treatment for sensorineural hearing loss based on local delivery of glial cell line-derived neurotrophic factor.
Having raised about CHF75 million since its formation, Auris Medical is now the best funded firm on the otology block.
In other financings news:
Agenus Inc., of Lexington, Mass., retired its outstanding $39 million 8 percent senior secured convertible notes issued 2006. The debt was eliminated for $10 million in cash, 2.5 million shares of common stock and 20 percent revenue interest from QS-21 Stimulon-partnered programs. Connected with the retirement of the notes, Agenus closed a senior secured debt transaction for $5 million with Silicon Valley Bank and a separate senior subordinated debt offering with investors for $5 million. The company's total debt obligation has been reduced by $10 million.
BEATBio, of Seattle, closed a $2.5 million seed stage investment with funding by CET Capital Partners and participation by other investors including the W Fund. Proceeds will be used to advance its gene therapy product for congestive heart failure into clinical development. The therapeutic mechanism is based on a naturally occurring enzyme that, according to BEATBio, can act as a super fuel to increase pumping power of heart muscles.
ChemoCentryx Inc., of Mountain View, Calif., commenced its underwritten public offering of $60 million in common stock. It will grant underwriters a 30-day option to purchase up to 15 percent of the number of shares sold to cover overallotments. J.P. Morgan Securities LLC and Goldman, Sachs, and Co. are joint book-running managers for the offering, which will be subject to market conditions. Shares of ChemoCentryx (NASDAQ:CCXI) fell $1.32, or 9.7 percent, to close Tuesday at $12.26.
Omthera Pharmaceuticals Inc., of Princeton, N.J., said it closed its initial public offering of 8 million shares priced at $8 apiece for gross proceeds of $64 million. Funds are expected to help push Epanova, the purified mix of free fatty acid forms of eicosapentaenoic acid and docosahexaenoic acid, to the market for severe hypertriglyceridemia. BofA Merrill Lynch, Barclays and Leerink Swann acted as joint book-running managers, while Stifel and Piper Jaffray served as co-managers. (See BioWorld Today, April 2, 2013.)
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