The scientific campaign for a better version of Velcade (bortezomib, Takeda Oncology Co.) for multiple myeloma (MM) that began at Proteolix Inc. survived two mergers and ultimately failed, but led to the formation of Kezar Life Sciences Inc., with a promising approach, not to cancer but to autoimmune disorders.

Kezar, of South San Francisco, raised $50 million Tuesday in an oversubscribed series B round, disclosing at the same time the successful finish of a phase Ia healthy volunteer study with lead candidate KZR-616, a first-in-class immunoproteasome inhibitor.

"I started working on this project back at Proteolix, when we were initially making selective inhibitors of the immunoproteasome because we thought they would be good cancer drugs," especially against MM, Christopher Kirk, Kezar's co-founder and chief scientific officer, told BioWorld. "Along the way, our research told us that the idea was wrong. You needed to hit both forms of the proteasome," as do Velcade, Kyprolis (carfilzomib, Amgen Inc.), and Ninlaro (ixazomib, Takeda Oncology Co.).

An immunologist by training, Kirk with his team over the next "number of years were able to create a body of data to suggest that the immunoproteasome actually plays quite a fundamental role in regulating many different aspects of immune responses, and by a unique way in which we administer the drug – namely in an episodic way, giving the drug infrequently – we were able to mediate immunomodulatory effects without inducing any immunosuppression in our mouse models."

Velcade "has been used off label for a number of autoimmune disorders, generally in patients who fail their standards of care" with biologics, Kirk noted, and is typically dosed only for a short period of time because of the side-effect profile. Some problems with Velcade are on-target, such as thrombocytopenia, anemia, neutropenia and fatigue, but not all. "In particular, the peripheral neuropathy with Velcade is driven by an off-target effect," he said. "What we've learned over the years is that those systemic on-target effects like hematological changes and fatigue are due to dual proteasome inhibition. By changing the chemistry of Velcade to what we have with KZR-616, we're able to eliminate that off-target activity that causes the peripheral neuropathy. We're able to keep all the anti-inflammatory activity but in a better tolerated package."

Kirk wanted to go farther, but "unfortunately, Proteolix couldn't afford to do so, and by the time we felt we were on the path to getting a good drug candidate at Onyx [which had acquired Proteolix in the meantime], Amgen came and bought the company. Amgen wasn't interested in taking this small-molecule program forward, but was interested in enabling the patent estate to be licensed to Kezar down the road."

Proteolix, of South San Francisco, was acquired by Emeryville, Calif.-based Onyx Pharmaceuticals Inc. in 2009, and Onyx was taken over by Amgen Inc., of Thousand Oaks, Calif., in 2013. (See BioWorld Today, Oct. 13, 2009, and Aug. 27, 2013.)

"At the risk of sounding both flippant and arrogant, we believe most if not all autoimmune disorders are amenable to immunoproteasome inhibition," Kirk said. "The anti-inflammatory profile from our preclinical models is unlike any other targeted agent that's currently in development in autoimmunity. It impacts inflammatory cytokines – all of those that are currently targeted by biologic therapies, both approved and in clinical development.

"It has impact on T cells and B cells. In essence, it's able go the headwaters of the river for pathogenic inflammatory responses, and hit a reset button to normalize immune responses."

Kezar has special interest in areas of unmet need, such as lupus nephritis, where "global immune dysregulation [is] going on," he said, such that monoclonal antibodies against tumor necrosis factor and B cell-depleting therapies aren't good enough. "You really need to target multiple arms of the immune response in order to bring benefit to these patients," he said. "We'll be talking to the FDA later this year about potential clinical trial designs for studies in patients, and our goal is to be dosing the first set of patients in a phase Ib/II trial in early 2018. This will be in patients with a variety of rheumatic diseases, and then we will go into randomized studies in patients with lupus nephritis."

Team to expand

CEO John Fowler, also a co-founder, said Kezar leaders "have a tremendous amount of conviction around KZR-616 in this modality and, together with our investor group, feel like we'd like to bring this pretty far down the court before doing a comprehensive partnership."

The company has "not engaged in any partnership discussions yet," he told BioWorld, and pointed to a second research effort in conjunction with the University of California San Francisco (UCSF). It's steered by a third co-founder, Jack Taunton. "I think there will be some very compelling wide and narrow partnering opportunities within our [UCSF] protein-secretion program that we look forward to exploring in the coming year," Fowler said.

Kezar wanted to "have both discovery work and clinical development work happening within the same company, for a variety of reasons," including risk mitigation and for recruiting purposes, as "scientists love to have exposure to both sides of the house and we're able to do that in our albeit-small company," he said.

The latest financing follows a series A round of $23 million in June 2015 and gives Kezar a runway at least until mid-2019, Fowler said. With a staff that numbers "in the double digits," the company outsources some work but has a core team handing research and development, including medicinal chemistry, pharmacology/toxicology, and other research. "We have a vivarium so we can do small-scale animal studies in house," he said. The company plans to add team members with the new money.

Kezar's name is "an old-school reference to San Francisco sports history," he said. "Chris and I are both Bay Area natives and sports fans." Kirk lives "only a block or two from Kezar Stadium at Golden Gate Park."

Leading the series B round were Cormorant Asset Management and Morningside Venture. New investors participating included Cowen Healthcare Investments, Pappas Ventures, Qiming Venture Partners and Bay City Capital, joined by others also on board already: Ecor1 Capital, Omega Funds and Aju IB Investment. As a part of the new financing, Bihua Chen, founder of Cormorant, joins Kezar's board.