Existing investor Omega Funds linked up with new backer Novo Holdings to co-lead the $80 million series B for Morphic Therapeutic Inc. New investors Invus and Ecor1 Capital and Morphic's other series A investors joined the round, designed to propel the company's lead small-molecule integrin modulator and a follow-on oral integrin candidate through IND-enabling and clinical proof-of-concept studies.
The financing is deliberately larger in size and scope than Morphic's $51.5 million series A, co-led in 2016 by SR One and Pfizer Venture Investments, with participation from Omega and Abbvie Ventures. (See BioWorld Today, July 1, 2016.)
At the time, Omega took only a "low single-digit stake" in the startup but wanted more, recalled Praveen Tipirneni, Morphic president and CEO. By the time the series B was in play, Omega "knew us extremely well" and became "more and more excited to have a higher stake in the company," he told BioWorld. Attracting Novo, which Tipirneni called "one of the largest dedicated life science investors in the world," as co-lead provided "a great fit" for the round, he said, although all members of the syndicate had kept in touch and "charted our progress" over the past two years.
In conjunction with the series B, Otello Stampacchia, managing director at Omega, and Nilesh Kumar, partner at Novo Ventures, joined Morphic's board.
The series A was sized to confirm the founding thesis of Waltham, Mass.-based Morphic, which emerged from the findings of founder Timothy Springer, professor at Harvard Medical School and professor of medicine at Children's Hospital Boston, who remains on Morphic's board and scientific advisory board. Morphic was launched in 2015 with support from Springer, Polaris Partners, Schrödinger Inc. and Shangpharma Investment Group Ltd.
Early in his academic career, Springer discovered integrins – adhesion receptors that mediate many of the key cell-cell and cell-extracellular matrix interactions – and their ligands. He subsequently worked to elucidate regulation of their biological function, resulting in detailed characterization of integrin structure and understanding of the biophysical phenomena underlying their activation.
Integrins signal bidirectionally to control a variety of cellular biological processes, including development, cell attachment, migration, division, growth, differentiation, survival and apoptosis. Research in Springer's lab showed that, historically, compounds designed to turn off integrin activity inadvertently worked to promote it, leading to the subsequent failure of oral drug candidates directed at integrin targets.
Morphic is seeking to capitalize on Springer's research to design small-molecule antagonists that reverse that activation by preventing integrins from occupying disease-specific signaling and conformational states.
Essentially "starting from scratch" when it was founded, the company made significant progress in understanding the conformations of the 24 known integrins in humans and "hit every milestone" associated with the series A, Tipirneni said. That headway occurred even though "it turns out that the science story is much more complicated than we initially thought," he acknowledged.
Morphic also made "massive progress" in its therapeutic development, he added, thanks in part to an exclusive partnership with Schrödinger for chemical modeling and in silico drug discovery that incorporates next-generation physics-based technologies, machine learning and artificial intelligence.
The B round now gives the company sufficient cash to generate proof-of-concept data from its most advanced programs. Its lead selective alpha-v/beta-6 integrin modulator addresses what Tipirneni called "a semi-validated" target in fibrosis, with indications ranging from chronic kidney disease to idiopathic pulmonary fibrosis to nonalcoholic steatohepatitis (NASH).
Acknowledging the breadth of those diseases, "we have a path forward ourselves, but we also view the need for potential partners," Tipirneni said. As it prepares to move the fibrosis candidate into IND-enabling studies with an eye to the clinic next year, Morphic already is enjoying inbound interest: Some half-dozen companies have completed due diligence on the asset, with "no red flags anywhere," he said.
'Paving of new ground' with regulators
When talking about a small-molecule approach to tamp down fibrosis, Morphic faces "some paving of new ground" with regulators, Tipirneni said. "But there's also innovation in clinical trial design and in utilizing biomarkers to understand safety and efficacy earlier in the development cycle, and that's all part of the regulatory approach. Fibrosis is part of the pathophysiology of a lot of different diseases, and we're getting better about understanding the disease process and evolution."
That said, Morphic won't necessarily seek an expedited pathway for its lead asset.
"We are actively seeking ways to show efficacy earlier," Tipirneni said, "but as of today, we do believe you need a good phase II study" to tease out such findings.
Second in line is the company's alpha-4/beta-7 integrin modulator, which Tipirneni called a "completely validated" target for the potential treatment of inflammatory bowel disease – a target already antagonized by Entyvio (vedolizumab) from Osaka, Japan-based Takeda Pharmaceutical Co. Ltd. That drug was invented by Springer at Leukosite Inc., which later merged with Millennium Pharmaceuticals Inc. before that company was acquired by Takeda. (See BioWorld Today, Oct. 18, 1999, April 11, 2008, and May 21, 2014.)
Morphic's oral alpha-4/beta-7 integrin program, which is completing lead optimization, expected to enter IND-enabling studies next year and move into the clinic in 2020, is "much more tractable for a small company, so we're holding on to that one," Tipirneni said.
The company's other programs, still in discovery, include alpha-v/beta-1 integrin modulators also targeting fibrosis and alpha-v/beta-8 integrin modulators aimed at immuno-oncology applications.
With more than two dozen employees on board – all but two in Morphic's R&D shop – Tipirneni now plans to build the company's development team, albeit gradually. Although the company is in no hurry to consider its next financing move, the addition of crossover investors positions it for a run at an IPO when the time is right. Tipirneni, who served as senior vice president of corporate development and global strategy at Cubist Pharmaceuticals Inc. from 2002 until that company's $9.5 billion acquisition in 2015 by Merck & Co. Inc., admitted that he likes to think "long term."
Tipirneni also credited big pharma's scientific drawdown as a door-opener for small biotech, enabling companies like Morphic to hire "amazing" chemists and biologists. For example, Bruce Rogers, the company's chief scientific officer, spent more than 20 years in drug discovery, preclinical and early stage development programs, most recently as head of neuro-opportunities at Pfizer Inc. Alexey Lugovskoy, chief development officer, previously served as a vice president of therapeutics at Merrimack Pharmaceuticals Inc. and, prior to that, as associate director of drug discovery at Biogen Inc., where he co-discovered inhibitors of three integrins and was a member of the progressive multifocal leukoencephalopathy risk mitigation team for Tysabri (natalizumab).
Blaise Lippa, head of chemistry, began his career in medicinal chemistry at Pfizer before serving as senior director of medicinal chemistry at Cubist prior to the Merck acquisition. Liangsu Wang, head of biology, spent 12 years at Merck working on drug discovery programs in infectious diseases, cardiovascular diseases, and diabetes and endocrinology before serving as the pharma's executive director of diabetes and NASH late discovery.
"The way that technology is moving, we've been fortunate to get world-class scientists from big pharma," Tipirneni said.