Six months ago start-up firm Epiphany Biosciences in-licensed a compound for varicella zoster virus. With the closing of a $36 million Series A round, the company now is poised to advance that product through Phase IIb trials, as well as continue work on a blood-screening product for herpesvirus-8.
Greenwich, Conn.-based Wexford Capital LLC led the financing, which included investments from seed investor Windsor Bay Capital, of Boca Raton, Fla., and new investors Global Trust Ventures Management LLC, San Diego-based CDIB BioScience Venture Management and several private investors.
Funds from the round are expected to sustain the company's operations for "the next three to four years," said Fred Volinsky, CEO.
Founded a couple of years ago, San Francisco-based Epiphany is "still in stealth mode about some of our programs," he told BioWorld Today, though he said it's the company's goal to "totally redefine virology."
One program Volinsky could talk about was EPB-348 (valomaciclovir), to which the company gained worldwide rights, except for the Nordic countries, from Huddinge, Sweden-based Medivir AB. In that deal, signed in September, Medivir received an equity investment in Epiphany and also is eligible for milestones of up to $24.5 million and royalties on any product sales. (See BioWorld Today, Sept. 11, 2006.)
To date, EPB-348 has demonstrated positive results through Phase IIa testing against varicella zoster virus (VZV), a herpesvirus that usually presents as chickenpox in children but can lead to shingles or postherpetic neuralgia in adults. While more than 90 percent of adults are believed to be chronically infected with VZV, it generally remains dormant. But in some cases, the virus becomes reactivated.
There are an estimated 1 million cases of zoster in the U.S. annually, though, with the "tsunami wave of aging baby boomers," Volinsky said, the firm believes the market easily could double, despite the availability of Zostavax (Merck & Co. Inc.), a vaccine approved in May 2006 to prevent shingles in patients ages 60 and older. There have been "issues with that vaccine," he added, leaving a large potential market for therapeutic products like EPB-348.
Epiphany expects to start a Phase IIb trial in the third quarter, and to complete that study before even considering whether to seek partnering opportunities or proceed to late-stage studies on its own.
While keeping mum on the drug's mechanism of action, the company is confident that further clinical work will bear out the positive safety and efficacy results reported in preclinical studies. Volinsky called EPB-348 "the pharmaceutical version of Seabiscuit," referring to the champion racehorse that was "often misunderstood," but did well when handled by the right owner and trainer.
"We think our collaboration with Medivir puts the drug into the right hands," he said.
While advancing EPB-348, the company also intends to move forward with a diagnostic product based on herpesvirus-8, also known as Kaposi's sarcoma-associated herpesvirus (KSHV/HHV-8), which was discovered by Epiphany scientific advisory board members Yuan Chen and Patrick Moore. Epiphany is working to design a screening test to identify HHV-8 infection, and that test would be added to the battery of other diagnostic tests run on donated blood used in transfusions and transplants.
Recent studies have shown that HHV-8 affects not only immunocompromised patients, but also healthy subjects, particularly of certain ethnicities, including people of Mediterranean, Jewish or African descent. And data reported by the CDC in a New England Journal of Medicine article showed that the virus is "four times more likely to be transferred through blood than West Nile virus," said Chris Hofmann, Epiphany's senior director of business development. Tests for West Nile already are included in the screening process. Rights to the KSHV/HHV-8 virus were licensed from Columbia University.
The company declined to disclose a timeline for approval of the screening test, but Volinsky said, "we're planning rapid regulatory development.
"We have a lot of credibility in this space," he said, adding that members of the firm's management, board and scientific advisory board include a number of prominent virologists, such as Chief Scientific Officer Michael Houghton, an Albert Lasker award winner for his work in discovering the hepatitis C virus and developing a diagnostic screening test. Co-founder Robert Gallo and additional SAB members Roger Kornberg, Hans Wigzell and other scientists make up the company's virology teams.
Earlier in its pipeline, Epiphany is working in HCV and looking for candidates against other undisclosed indications.
In other financings news:
• Genta Inc., of Berkeley Heights, N.J., closed its previously announced offering of 30 million shares of stock to raise gross proceeds of about $11 million. Proceeds are expected to support general corporate activities, including product sales from the named-patient distribution programs for Ganite (gallium nitrate injection) in cancer-related hypercalcemia and Genasense (oblimersen sodium) in cancer. Rodman & Renshaw LLC served as the placement agent for the offering. Shares of Genta (NASDAQ:GNTA) closed at 38 cents Thursday, up 1 cent.
• Oscient Pharmaceuticals Corp., of Waltham, Mass., filed with the SEC for proposed exchange offers involving holders of its outstanding 3.5 percent senior convertible notes due 2011 and 5 percent convertible promissory notes due in 2009, plus the sale of additional notes for cash. In its offers, Oscient expects to offer up to $185.4 million aggregate principal amount of its new 3.5 percent notes for up to all of the $152.8 million principal amount of its currently outstanding 3.5 percent notes and $22.3 million of its outstanding 5 percent notes. In addition, the company intends to offer for cash up to an additional $30 million aggregate principal amount of new 3.5 percent notes. Oscient said in its statement that the exchange offers are part of its plan to recalibrate its capital structure to better execute the company's business strategy. Piper Jaffray & Co. is serving as the dealer manager for the exchange offers and placement agent for the new money offering. Shares of Oscient (NASDAQ:OSCI) fell 31 cents Thursday to close at $4.22.
• DOV Pharmaceutical Inc., of Somerset, N.J., accepted all of its 2.5 percent convertible subordinated debentures due 2025 that were tendered in its exchange offer expiring earlier this week. DOV received tenders of and accepted for the exchange debentures in the aggregate principal amount of $67.5 million, representing about 96.4 percent of the $70 million in principal outstanding. Additionally, the company agreed to issue to holders of its common stock 30 million warrants to purchase additional shares at an exercise price of 52 cents each. DOV's stock (OTCBB:DOVP) closed at 38 cents Thursday, down 1 cent.