BioWorld International Correspondent

LONDON - The flood of new money into European biotechs continued as Oxagen Ltd. announced the completion of a £16 million (US$26.4 million) third-round funding, with new investor Novartis Venture Funds leading the round.

The money will enable the company to advance its portfolio of CRTH2 antagonists in treating inflammatory and respiratory disease treatments. The lead molecule, OC000459, will be out-licensed once it completes an ongoing Phase IIb study in moderate persistent asthma.

Mark Payton, CEO, told BioWorld International the environment for raising money was difficult, but picked up toward the end of the process, indicating the drought brought on by the credit crunch is easing. "I'd expect other things to come trickling out now. We know investors have money, but they were conserving it to look after existing companies."

Payton is pleased also to have landed Novartis Venture Fund as a new investor. "This is a highly credible fund and adds an extra edge as the first pharma-related investor in the company - though it's important to note this is an independent investment by the fund and not part of any licensing deal." All Oxagen's existing investors, including MPM Capital, SV Life Sciences, Advent Ventures, Bessemer Venture Partners and Abingworth, followed on.

Abingdon, UK-based Oxagen was an early mover in the CRTH2 (Chemoattractant receptor-homologous molecule expressed on TH2) field, uncovering the significance of the G protein-coupled receptor target through family gene-linkage studies. That was before prostaglandin was shown to be the ligand for CRTH2, and thus that blocking the effects of CRTH2 prevents the release of prostaglandin-induced eosinophils.

"Before prostaglandin was found to be the ligand, we already had huge linkage maps connecting CRTH2 to asthma. We jumped on CRTH2 as a target, and although it was in the public domain, we were the first to realize its significance in asthma," Payton said.

Payton said Oxagen has been talking to potential licensees of OC000459 for a year or so, but decided to hold off until the end of Phase IIb to deliver stronger data. As he noted, the asthma market will go generic after 2012 when the two biggest selling products, Singulair (Merck) and Advair (GlaxoSmithKline plc) come off patent.

"To get to proof of concept in asthma won't cut it any more; you've got to meet the target profile, which is the efficacy of an inhaled corticosteroid with the safety of Singulair," Payton said.

Screening for CRTH2 antagonists has delivered multiple lead series, and with the new funding, Oxagen expects to pursue other eosinophilic disorders. The company has proof of concept in allergic rhinitis and has compounds that are active in atopic dermatitis. Payton also noted that other companies are developing CRTH2 antagonists in chronic obstructive pulmonary disorder.

"There are now so many players, we will see a broadening out of the indications," Payton said. While CRTH2 is involved in all aspects of inflammation, it is only expressed in TH2 cells, eosinophils and basophils. "In other words, it is surgical in its ability to take out the activity of these cells," he noted.

Oxagen's last funding round was in May 2005 when it raised $59.8 million in a round led by MPM Capital LP, of Boston, in its first UK investment.

Earlier the company, then positioned as a gene-hunting specialist, attracted £30 million at the height of the genomics boom in December 2000.

From its inception in 1997, Oxagen built large collections of tissue and blood samples and clinical data from disease-affected families covering nine common diseases, which it used for gene hunting. After a rationalization program that began in mid-2002, the company has emerged as a specialist in CRTH2.

Published  November 25, 2009