Assistant Managing Editor

Cocrystal Discovery Inc., a Seattle-based start-up company aimed at developing small-molecule antiviral drugs, brought in $10 million in its first financing round to support initial programs aimed at hepatitis C and influenza.

The firm was founded last year by CEO Gary Wilcox and scientist Sam Lee - both alums of Bothell, Wash.-based ICOS Corp., which was acquired by Eli Lilly & Co. for about $2.3 billion in 2006 - along with Roger Kornberg, a Stanford University professor and winner of the 2006 Nobel Prize in chemistry for his work in structural biology.

"We're just getting going," Wilcox told BioWorld Today. "It's really this financing that catalyzes the company."

The $10 million private placement was led by Miami-based investment firm The Frost Group LLC, with industry veteran Phillip Frost joining Cocrystal's board.

Citing the "tremendous need all over the world for better antivirals," Wilcox said the goal is to build Cocrystal's pipeline through its own research and discovery efforts, as well as through in-licensing opportunities.

Its own discovery platform is based on a structural biology approach. One of its methods - reflective of the company's name - uses high-throughput X-ray crystal screening to develop cocrystal drug candidates that can bind with members of an enzyme family.

"Our focus is exclusively on viral replication inhibitors," Wilcox said. "Viruses have to replicate, and it's often the enzyme" that facilitates replication.

Cocrystal initially intends to pursue development programs in hepatitis C and flu, both of which are particularly challenging diseases given that the viruses constantly mutate and become resistant to treatment, Wilcox said. "We'll be focusing early on in our work to counter the mutations that make viruses resistant."

Current treatments for hepatitis C consist mainly of the standard of care regimen of interferon plus ribavirin, but "only about 30 percent of patients have a therapeutic response" on that treatment, Wilcox said. "There are also significant side effects, especially with interferon.

"So we believe the future of care lies in the new classes of antivirals, which have fewer side effects and better efficacy," he added.

Cocrystal isn't alone in trying to improve hepatitis C treatments. A number of firms have programs ongoing, including Vertex Pharmaceuticals Inc.'s telaprevir and Schering-Plough Corp.'s boceprevir, both of which target the HCV protease enzyme to inhibit viral replication. Cambridge, Mass.-based Vertex recently received the go-ahead from U.S. and European regulators for a pivotal Phase III trial of telaprevir in combination with PEGylated-interferon and ribavirin in hepatitis C patients who failed prior therapy. Boceprevir also is set to start Phase III, and Kenilworth, N.J.-based Schering-Plough has said it plans to enroll treatment-naïve patients.

Cocrystal also hopes to develop a new class of small-molecule antivirals for treating flu, specifically by targeting the polymerase enzyme, Wilcox said.

The company's work begins at the lead identification stage of discovery, but "we're working with validated targets, so that removes a major risk," he said. Cocrystal plans to move "as rapidly as we can," with hopes of moving its first programs into human testing in two to three years.

Its $10 million financing "should last for several years under the current plan," Wilcox said, adding that the company plans to do a lot of outsourcing. Right now Cocrystal is staffed by four employees, "but we will be growing in the near future," he added.

In other financings news:

• ViRexx Medical Corp., of Edmonton, Alberta, said LM Funds Corp. exercised its option to exchange its convertible loan issued to the company June 4, into common shares of ViRexx. LM received 10 million shares priced at C10 cents (US9 cents) each, plus a one-half warrant accompanying each share. LM's conversion relieves the general security agreement covering all of ViRexx's acquired and intellectual property.