Swiss firm Covagen moves lead Fynomab toward clinic
By Cormac Sheridan
Hailing the investment as one of Europe’s biggest for a preclinical-stage biotech firm, Covagen AG closed a Series B round at CHF42 million (US$47 million) and has provided its investors with an option to extend the round by another CHF14 million.
The company’s days as a preclinical biotech are numbered, however, as it will shortly move its lead molecule, COVA322, into a Phase I trial in patients with psoriasis. All going well, the molecule, a bispecific inhibitor of TNF-alpha and interleukin-17A (IL-17A), will then enter a six-month Phase II trial in 200 patients with psoriatic arthritis.
That study would be completed by the end of 2016, and, if the data are good enough, the drug would then be ready for Phase III development, Julian Bertschinger, CEO of Switzerland-based Covagen, told BioWorld Today.
Covagen, a 2007 spinout from the Swiss Federal Institute of Technology Zurich, is commercializing a protein recognition platform based on molecules called Fynomers, which are derived from the Src homology 3 domain of Fyn tyrosine kinase. These can be added to a bispecific antibody, resulting in a Fynomab, a tetravalent, bispecific molecule that can be produced and purified like a conventional antibody. The sequence encoding the Fynomer is inserted into the antibody gene cassette, and its expression does not interfere with antibody folding or stability, Bertschinger said.
COVA322 comprises a clinically validated TNF-alpha inhibitor fused to two Fynomers that recognize IL-17A. The company is testing it first in psoriasis patients, as the dermatological condition offers a ready-made efficacy readout, even if the main focus of the trial is on the drug’s safety and the pharmacokinetic profile. “But we will be able, once we reach therapeutic dose levels, to see the biological effects of our molecule,” Bertschinger said.
Several IL-17 inhibitors already are undergoing Phase III trials in psoriasis, on the back of spectacular Phase II data, however, so there is little scope for COVA322 to do better in that indication. The company is targeting psoriatic arthritis, an indication that combines the pain and joint destruction of rheumatoid arthritis with the skin inflammation of psoriasis. At present, several TNF-alpha inhibitors are approved, as is Stelara (ustekinumab), a Johnson & Johnson antibody, which targets the p40 subunit of IL-12 and IL-23. Neither approach is completely effective, however.
Data from the collagen-induced arthritis mouse model provides evidence in support of Covagen’s approach. “You get better therapeutic effects if you inhibit TNF-alpha and IL-17 at the same time than if you inhibit either TNF-alpha or IL-17 alone,” Bertschinger said. Targeting the two cytokines could at least provide an additive, if not synergistic, effect, he said.
Gene expression experiments indicate there is only a 10 percent overlap between the two sets of genes whose expression is influenced by either one of the two cytokines. Most genes whose expression is regulated by one are unaffected by the other.
“You’re going in broader,” Bertschinger said. “You can use a very low dose of inhibition if you hit both pathways at the same time.” In mice, a bispecific molecule has a level of potency which is fourfold that of a single-target agent. That could help to decouple the clinical effect of the drug from the potentially dangerous effects of immunosuppression associated with high doses of cytokine inhibitors. “What we’re trying to do with our molecule is partially inhibit the two pathways at the same time,” Bertschinger said.
Oncology is another obvious therapeutic domain for the technology, given the rapid progress made by many companies with both antibody- and cell-based therapies aimed at two targets. Covagen’s lead oncology project, COVA208, targets two epitopes on the HER2 receptor.
Although the approach is reminiscent of the combination of Perjeta (pertuzumab) and Herceptin (trastuzumab), which the Genentech arm of Basel, Switzerland-based Roche AG has developed, Bertschinger said the signaling effects of COVA208 are different. “We can directly induce an apoptosis signal in tumor cells, which you cannot do with other HER2-targeting agents,” he said. That program is nearing the end of its discovery phase.
The company recently gained a milestone from partner Mitsubishi Tanabe Pharma Corp, which opted to move a bispecific Fynomab into formal preclinical development. Osaka, Japan-based Mitsubishi Tanabe has also extended the alliance it entered a year ago to include a second Fynomab against another pair of targets. (See BioWorld Today, Oct. 18, 2012.)
Gimv, of Antwerp, Belgium, led the new round with a CHF8.3 million investment, while New York-based Ascent Biomedical Ventures also invested in Covagen for the first time. Existing investors Novartis Venture Fund, Edmond de Rothschild Investment Partners, Seroba Kernel Life Sciences, Ventech and MP Healthcare Venture Management Inc, also participated.
In other financings news:
Celldex Therapeutics Inc., of Hampton, N.J., said underwriters exercised in full their option to purchase an additional 1.05 million shares of common stock at the public offering price of $24.50, generating additional net proceeds of approximately $18.9 million. The company said approximately 813,000 shares in the overallotment were sold by Celldex and the remainder by stockholders. The offering is expected to close by Dec. 10. Celldex plan to use the net proceeds to fund clinical trials of product candidates and for other corporate purposes. Jefferies LLC and Leerink Swann LLC are acting as joint book-running managers, with Guggenheim Securities, Oppenheimer & Co. Inc., Wedbush PacGrow Life Sciences, Brean Capital LLC, Cantor Fitzgerald & Co. and Roth Capital Partners as co-managers. (See BioWorld Today, Dec. 6, 2013.)
Indi Molecular, of Culver City, Calif., said it raised $300,000 from a new investor, Asset Management Ventures, to expand its seed round to $1.8 million. The round was led by Interwest Partners and joined by several angel investors. The funds will be used to further develop protein catalyzed capture (PCC) agent technology to produce synthetic peptide molecules capable of binding interactions that are equivalent or superior to molecular antibodies. The company also said it published three papers on the PCC technology in collaboration with researchers at the California Institute of Technology. The papers, which appeared in Angewandte Chemie, PLOS One and ACS Nano, described how PCC agents can be targeted at a specific region of a selected protein, how a small panel of PCC agents was designed to detect specific anti-HIV1 antibodies in a blood-based diagnostic assay and how a PCC agent was designed to detect the protein protective antigen.
Lorus Therapeutics Inc., of Toronto, completed its public offering, issuing 12.73 million common shares at 55 cents apiece for proceeds of $7 million. The offering was co-led by Clarus Securities Inc. and Canaccord Genuity Corp. and included Jennings Capital Inc., D&D Securities Inc. and Powerone Capital Markets Ltd. The company granted the underwriters an option to purchase up to an additional 15 percent of shares at the offering price for up to 30 days to cover overallotments. Brian Underdown, managing director of Lumira Capital, which participated in the offering, will join the company’s board. Sheldon Inwentash, who exercises control or direction over more than 10 percent of the company’s common shares, also acquired 1.82 million shares personally and through Pinetree Capital Ltd. Lorus plans to use net proceeds to fund its clinical trial and manufacturing programs and for other corporate purposes.
Tetralogic Pharmaceuticals Inc., of Malvern, Pa., which postponed its initial public offering (IPO) last month, citing poor market conditions, filed an amendment lowering the proposed size of its deal Tuesday. The firm, which develops small molecules for cancer, now expects to offer 6.5 million shares priced at $7 each for gross proceeds of $45.5 million. Previously, it set an IPO price range of $13 to $15. Tetralogic, which filed to go public earlier this year as an emerging growth company, seeks to list on Nasdaq under the ticker “TLOG.” (See BioWorld Today, Oct. 22, 2013.)
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