After raising $28 million almost a year ago in the first tranche of a Series C financing, Aerovance Inc. brought in an additional $32 million in a second tranche, completing the $60 million round. (See BioWorld Today, May 8, 2006.)
New investor Clarus Ventures led the Series C, joined by new investor Alta Partners and existing investors Apax Partners, Lehman Brothers, NGN Capital and Burrill & Co. All investors participated in both tranches of the financing.
Mark Perry, president and CEO of Aerovance, said the second tranche payout was triggered by the achievement of "a predefined series of clinical and manufacturing milestones" relating to the company's pipeline of biologics for respiratory and allergic diseases. The Series C follows a $32 million Series B completed in 2004, concurrent with Aerovance's spinout from Bayer Pharmaceutical Corp. in exchange for Series A shares. (See BioWorld Today, Aug. 23, 2004.)
Perry said the financing should carry Aerovance "well into 2008," although he noted that the "biggest wild card" in determining future financing needs is the status of ongoing partnering discussions concerning the company's lead drug, Aerovant. A partner likely will be chosen this year, and the deal could allow Aerovance "to move beyond 2008 and to an IPO," Perry said.
Partnering interest in Aerovant, a recombinant human IL-4 variant, stems from Phase IIa data released in January showing that the drug reduced the severity of late asthmatic response by a statistically significant 72 percent compared to baseline. And while asthma drug Xolair (omalizumab, Genentech Inc. and Novartis AG) inhibits IgE and must be injected, Aerovant inhibits upstream targets IL-4 and IL-13 and would be inhaled. Perry noted, however, that Aerovant is intended for uncontrolled asthma in which other drugs, such as Xolair, have failed.
Aerovance is completing additional formulation and toxicology studies with Aerovant and plans to begin a dose-ranging Phase IIb trial no later than early 2008. While the Phase IIa trial delivered an inhalable formulation of the drug using a nebulizer in response to an asthma challenge, the Phase IIb will use an inhaled device to deliver a dry powder formulation of the drug in a field-based study.
"If we secure a partner now, that partner can fund and be a part of designing and executing that trial," Perry said.
Berkeley, Calif.-based Aerovance also has completed a Phase IIa trial with Aeroderm, an eczema drug that works through the same mechanism as Aerovant. The Phase IIa trial used a twice-daily injection to provide initial proof of concept in eczema, but the company now is PEGylating the drug for once-weekly injection, a more market-friendly strategy that is slated for Phase II in 2008.
Beyond Aerovant and Aeroderm, Phase IIa trials are expected to wrap up this summer with Aerolytic, a serine protease inhibitor for cystic fibrosis. While existing CF drugs like Pulmozyme (domase alfa, Genentech Inc.) and TOBI (tobramycin solution for inhalation, Chiron Corp.) target the mucous and infections associated with the disease, Aerolytic is designed to work upstream and inhibit prostasin, the overexpression of which is involved in mucous production.
Aerovance also completed a Phase IIa chronic obstructive pulmonary disease study of Pulmolytic, which shares the same mechanism of action as Aerolytic, but Perry said the company has "no current plans to do any more studies" in that indication due to the "long and difficult" development pathway.
Aerovance currently holds worldwide rights to the Aerovant/Aeroderm and Aerolytic/Pulmolytic programs in respiratory and allergic diseases, providing plenty of room for expansion into new indications if the initial trials are successful. The company also acquired a pipeline of preclinical candidates in its spinout from Bayer, but Perry said Aerovance hasn't had "the financial or human resources" to pursue those yet. Eventually, he envisions expanding Aerovance's current clinical development and manufacturing expertise both upstream to more discovery-oriented work with the preclinical pipeline and downstream to commercialization in niche markets.
"We're a 30-person company today, but we have big aspirations," he said.