West Coast Editor
Cancer-focused AVEO Pharmaceuticals Inc.'s rare balance between antibody and small-molecule discovery bagged $53 million in a Series D financing that leaves the firm with enough cash to last "a little bit short of two years," said Tuan Ha-Ngoc, president and CEO.
"This will cover us until proof-of-concept data in man for the lead program, and maybe the second program," he said.
AVEO expects to start Phase II trials in the third quarter of this year with AV-951, its oral, second-generation, pan-VEGF receptor inhibitor. Behind that is AV-412, an EGFR/HER2 inhibitor in Phase I trials since October. The compounds came from the Japanese firms Kirin Brewery Co. Ltd. and Mitsubishi Pharma Corp., respectively.
Formerly known as GenPath Pharmaceuticals Inc., the Cambridge, Mass.-based firm shortly will celebrate its fifth anniversary, and Ha-Ngoc credits a dual, risk-mitigating approach.
The company started with a goal of making mouse models "to replicate what's going on in humans, in terms of biology," Ha-Ngoc said, noting that the original research was done at Dana Farber Cancer Institute.
Validating genes is what powers AVEO's internal drug discovery engine, but "we found the potential is such that we should go out and talk to companies who have compounds but may not have the kind of biology inside that we do," he said.
Internal discovery is antibody-based, hence deals such as April's potential $477.5 million pact with Kenilworth, N.J.-based Schering-Plough Corp. to develop and sell AV-299, a preclinical antibody designed to bind to and inhibit the hepatocyte growth factor/scatter factor. AV-299 aims at inhibiting the HGF/c-Met pathway, one that often correlates to poor prognosis for cancer patients whose tumors are HGF-dependent. (See BioWorld Today, April 5, 2007.)
"AV-299 is on track for an investigational new drug application filing at the beginning of next year," Ha-Ngoc said, noting that AVEO retains responsibility for proof of concept in the deal. "We want to be make sure we can better integrate data. Then we can utilize the machinery of the big company to do Phase III" trials.
Meanwhile, externally, Kirin-partnered AV-951 is expected to enroll its first patient in Phase II trials "sometime in the third quarter," he said. AV-412, partnered with Mitsubishi, started Phase I trials in October. When the compound might reach Phase II is "hard to guess," Ha-Ngoc said. "I hope sometime early next year."
Researchers, he noted, are finding that a specific EGFR mutation - at codon 858 - represents about 45 percent of those with mutations that cause non-small-cell lung cancer. Another mutation is found at exon 19, and Tarceva (erlotinib, Genentech Inc. and OSI Pharmaceuticals Inc.) has been found to have much more activity in those tumors.
"We were able, over a period of months, to create models that are one or the other," Ha-Ngoc said. "On [cancers that involve the] 858 deletion, we have 10 times more potency than Tarceva" with AV-412 in the models, he said.
What's more, a mutation at codon 790 seems to confer resistance to Tarceva. "We took that, and built it into our model," Ha-Ngoc said, and found that AV-412 apparently gets around the resistance.
"Whether the product will perform [in humans] is another thing," he allowed. "Right now, the probability of success is very low; the odds are against us. That's why it's so important that we have a pipeline composed of the right mix of risk." The company can test validated targets on its own, and seek partners such as Schering-Plough to help with those perceived as iffy.
Doing business with Asia-focused firms is easier not only because AVEO can buy rights outside the territory but also because of superior chemistry at Japanese firms, Ha-Ngoc said. Once, when asked how many scientists are on staff at his 90-person firm, Ha-Ngoc replied that he has "hundreds - they just happen to be on the payrolls of Mitsubishi and Kirin."
Ha-Ngoc has been doing business in Japan since 1985, when he opened the first-ever office of a U.S. biotech firm there. At the time, he was in charge of business development overseas for Genetics Institute Inc., acquired in late 1996 by Wyeth, then known as American Home Products Corp.
Participants in the oversubscribed Series D round include new investors Biogen Idec Inc., Bessemer Venture Partners, Merlin BioMed Group, Mitsubishi UFJ Financial Group and Vatera Holdings, an investment vehicle owned by Michael Jaharis, founder of Cranbury, N.J.-based Kos Pharmaceuticals Inc. (now part of Abbott Laboratories).
The financing also includes a $10 million equity investment from Schering-Plough Corp. as part of the AV-299 deal, and brought funding as well from AVEO's current institutional investors: Highland Capital Partners, Venrock Associates, MPM Capital, Prospect Ventures, Flagship Ventures, Oxford Bioscience Partners, Greylock Partners, Lotus Biosciences and GE Capital.