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NGM's Series C Garners $50M for Ongoing Work in Diabetes

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By Randy Osborne
Staff Writer

With a handful of collaborations already under way, NGM Biopharmaceuticals Inc. raised $50 million in a Series C round to advance in-house efforts in cardiometabolic diseases, including diabetes and obesity.

"The company was founded [five years ago] on clinical observations from bariatric surgery," said Aetna Wun Trombley, vice president of business development for South San Francisco-based NGM, which "really wanted to be ahead of the industry. At that time, bariatric surgery and its effects on diabetes was not very well studied, at least in terms of drug discovery. It was based on papers from a clinical research standpoint." (See BioWorld Today, March 22, 2010.)

Specifically, researchers found that 85 percent or greater of gastric-bypass surgery patients who were obese and had Type II diabetes saw their diabetes go away soon after the procedure. "Up to 15 years after surgery, these patients don't have to be on their medicine," Trombley said. "The hypothesis is that there is a regulation of some of your endocrine hormones. It's not weight loss, because this happens quite immediately after surgery, before any significant weight loss is observed in the patient."

NGM sought to replicate the bypass surgery environment in rodent models. "We also have human clinical samples from bariatric surgery patients to validate what we have discovered with our platform," Trombley said. "You want to start with human biology. If you see this happening in humans, it's more likely you will find something interesting that will eventually work [as a therapy]."

The company has isolated a set of secreted proteins that are being explored through a partnership with Johnson & Johnson unit Janssen Pharmaceuticals, and an internal program involves a separate set.

There's also an effort focused on enteroendocrine cells (EECs). "That's a separate discovery program, where we are looking for novel peptide and protein hormones that are located in the EEC cells," Trombley said. Whereas the finding that became the subject of the Janssen deal "was more of a global gastrointestinal [GI] discovery, here we are looking at a very specific set of cells, which make up less than 1 percent of the GI tract." EECs make and secrete hormones related to regulating blood glucose levels, food intake and stomach emptying. The approach drew interest from London-based Astrazeneca plc's biologics arm, Medimmune Inc., which last month partnered with NGM on the effort.

Third is a program partnered with Daiichi Sankyo Inc., of Parsippany, N.J., investigating factors that have impact on beta cell regeneration. With the Juvenile Diabetes Research Foundation, NGM is researching the same area for approaches to Type I diabetes.

Losing beta cell function is known to play a role in Type I and Type II diabetes. In the latter, blood glucose problems derive from peripheral insulin resistance that contributes to beta cell exhaustion, ultimately leading to insulin insufficiency. Type I, on the other hand, results from autoimmune destruction of the insulin-producing beta cells in the pancreas, and low insulin brings about increased blood and urine glucose. Finding a way to put back beta cells could help both types.

Another company has found EECs of interest. Elcelyx Therapeutics Inc., of San Diego, drew attention at the American Diabetes Association Scientific Sessions in Chicago last month by positing that the Type II diabetes drug metformin acts in the lower bowel, not in the bloodstream. The company drew its name from the EEC known as "L," and is developing a delayed-release formulation of metformin, called NewMet, based on what Elcelyx calls its gut sensory modulation approach. (See BioWorld Today, June 25, 2013.)

The beta cell regeneration strategy made news at the start of this year, when Evotec AG, of Hamburg, Germany, expanded its collaboration with Medimmune, after hitting a key milestone. Evotec collected a payment of €500,000 (then US$655,039), which triggered a commercial license granted to Medimmune and an extension of the diabetes and beta cell regeneration collaboration to the end of this year. The $345 million deal began in December 2010 and provided Medimmune exclusive access to a defined set of biologic targets believed to offer potential to prevent or reverse disease progression in diabetics. The size of the combined research team expanded with the reaching of the milestone, and Evotec received more research payments to support in vitro and in vivo experiments.

Trombley would not disclose which of NGM's internal programs might use most of the latest $50 million raised, nor would she speculate about when a compound might reach the clinic.

Several new NGM investors joined the Series C financing, including the Topspin Fund. Also taking part were existing investors, including the Column Group, Prospect Venture Partners, Rho Ventures and Tichenor Ventures. NGM has raised more than $130 million since the company's inception.

In other financings news:

• AcelRx Pharmaceuticals Inc., of Redwood City, Calif., priced an underwritten public offering of 3.8 million shares of common stock, at $11.65 per share. Gross proceeds of about $44.27 million are expected, and the offering will close on or about July 23. Underwriters are granted a 30-day option to purchase up to 570,000 additional shares of common stock.

• Carogen Corp., of Hamden, Conn., said it received pre-seed financing, including funds from Connecticut Innovations and an additional investor, which will allow it to complete its proof-of-concept studies in animals within the next 12 months for its chronic hepatitis B vaccine candidate. Carogen develops vaccines based on its virus-like-vesicles platform technology.

• Lithera Inc., of San Diego, completed a second closing of its Series C preferred stock equity financing, adding $6.7 million for a total of $27.3 million. The new tranche was led by RusnanoMedInvest and included new investors Mirae Asset Venture Investment and Andrea Holdings International Ltd., plus additional investors. Proceeds will support LIPO-202, for reduction of subcutaneous abdominal fat.

• Oncomed Pharmaceuticals Inc., of Redwood City, Calif., priced an initial public offering of 4.8 million shares of common stock at $17 per share, for a total of about $81 .6 million. Underwriters have a 30-day option to purchase an additional 720,000 shares of common stock. The offering was upsized from 4 million to 4.8 million shares based on investor demand. Oncomed's shares (NASDAQ:OMED) debuted strongly Thursday, jumping a whopping $10.18, or 59.9 percent, to close at $27. 18. (See BioWorld Today, July 11, 2013.)

• TG Therapeutics Inc., of New York, priced an underwritten public offering of 5.7 million shares of common stock at $6.15 per share. Underwriters have a 30-day option to acquire an additional 855,000 shares to cover overallotments. Total net proceeds are estimated at $32.5 million, and the offering is expected to close on July 23. Proceeds will be used to support development of cancer products TG-1101 and TGR-1202.