Nan Fung Life Sciences is “looking to make a significant presence in the field,” said Engrail Therapeutics Inc. CEO Vikram Sudarsan, whose firm bagged a $32 million series A round led by the global investment platform of Hong Kong’s Nan Fung Group, and its support represents “a clear statement in that direction.”

Sudarsan founded San Diego-based Engrail almost a year ago with Stephen Cunningham, formerly with Basel, Switzerland-based Novartis AG. The “two guys with an idea” revved up the firm around November and “moved fairly rapidly,” Sudarsan told BioWorld. “Within five months, [we] hired an incredible team and closed our first deal,” in-licensing the first candidate – EXN-101, a subtype selective GABA A modulator – from a partner not disclosed.

The mechanism of action is well proven in benzodiazepines, but such drugs bring “a lot of baggage,” namely risks of dependence as well as side effects, Sudarsan said. “The genetics suggest you can go after certain types of GABA modulators and perhaps do away with a lot of the loss of efficacy” while improving the side-effect profile. “Even now, 50 years into GABA modulation,” the treatments have not achieved their potential, he said. “We’ve spent a lot of time testing this [EXN-101] molecule in preclinical models and have some good ideas” about indications to target, such as seizures, muscle diseases and behavioral disorders. “We haven’t made specific choices yet, but will do so very shortly,” he said. The company plans to enter the clinic in the first quarter of next year.

“We think we have a very differentiated compound,” Sudarsan said. “We certainly see it as best in class,” though “I think we need to be a little bit careful about talking about subtypes in general, because the GABA channels are incredibly complex” and distinguishing specific features of candidates at the early stage is hard. “Time and clinical experience will tell,” he said. Although work with subtypes has been ongoing for a couple of decades, “I don’t think pharma cracked the puzzle of the pharmacokinetic/pharmacodynamic relationship,” he added.

“Neuroscience is a risky field,” Sudarsan noted, and Engrail wanted to choose as its premier candidate one with a thoroughly characterized mechanism, known “especially to the regulatory agencies around the world. We anticipate having fairly straightforward discussions on the clinical development,” since the receptor pharmacology is increasingly well understood. “As a first bet to make for a company in the neurosciences field, GABA modulation is a really credible way” to wade in, Sudarsan said. “But we’re not limiting our scope to GABA modulation.”

For Engrail, it’s been “a very busy time since November,” as Sudarsan and Cunningham built the team and evaluated more licensing prospects, he said. “We’re casting a fairly wide net, looking at both academic as well as biotech partnerships. We passed on many opportunities, just because they weren’t the right fit or the science wasn’t mature enough,” but the company is “in advanced discussions with several other partners at the moment,” he said.

Sudarsan called the past four or five years “incredibly fertile in the neuroscience space,” with satisfying progress by small and midstage biotech firms. “I’m seeing this as a renaissance,” he said. San Diego has proved to be something of a hub, he added, with a nod to the likes of Neurocrine Biosciences Inc., which recently made a splash by disclosing a deal with Tokyo-based Takeda Pharmaceutical Co. Ltd., which included $120 million up front to Takeda for an exclusive license to seven programs, including three clinical-stage assets targeting schizophrenia, treatment-resistant depression and depression-related anhedonia. Neurocrine will develop and commercialize all of the prospects, and Takeda could rake in $495 million more if development goals are met, plus as much as $1.4 billion in commercial milestone payments and up to double-digit royalties.

Engrail, with eight full-time employees and 17 to 20 consultants, takes its name from a gene type. The moniker also is meant, with “grail,” to suggest a quest or journey. Sudarsan said the current pandemic has not hampered that journey. “We’ve seen more opportunities for Engrail in the COVID-19 situation,” Sudarsan said. “This is the right time to start a company. Luck has been on our side. We could have been in a situation where we started a clinical trial and had to back off,” as others have done.

Among other players in GABA A is Cambridge, Mass.-based Sage Therapeutics Inc. with a depression franchise that includes zuranolone (SAGE-217), a next-generation positive allosteric modulator of GABA A receptors being evaluated in clinical development as a treatment for various affective disorders. Zuranolone has received breakthrough therapy designation from the FDA for the treatment of major depressive disorder (MDD). Late last year, Sage disclosed some encouraging top-line data from the phase III Mountain study with SAGE-217 in depressive symptoms in adults with MDD, but the study missed its primary endpoint. Sage markets Zulresso (brexanolone), an allosteric modulator of synaptic and extrasynaptic GABA A receptors, which is the first treatment approved by the FDA specifically for postpartum depression. Revenue for the first quarter of 2020 was $2.3 million, a 17% increase over the fourth quarter of 2019.

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