Washington Editor

Newly formed Calistoga Pharmaceuticals brought in $21 million in first-round funding to advance a drug development program licensed last summer from the former ICOS Corp., before its recent buyout by Eli Lilly and Co.

Privately held Calistoga, of Seattle, is focusing on therapies for oncology and inflammation. It's initially targeting p110 delta, a PI3 kinase isoform, and its portfolio includes advanced preclinical drug candidates against that target to be progressed into clinical trials with this venture capital over the next 18 months.

"These were endowed with a lot more information than one typically sees in compounds at this stage, in terms of knowing what one needs about oral bioavailability and lack of off-target interactions," said Calistoga President Mike Gallatin. "All of that was pretty well baked."

Echoing those thoughts, Chairman James Topper said the assets include "quite an extensive set of chemistry, know-how, expertise and intellectual property," noting that work has been under way to characterize the best of these molecules to advance through an investigational new drug application. "We think that there are multiple IND candidates in this series of compounds, and we are delineating which are the most attractive to us now."

Their excitement stems from the growing potential envisioned for PI3 kinases as a class, which Gallatin said "are very important in controlling a variety of cellular processes" related to growth, proliferation and immune activation. In addition, he said lipid kinases "are wired downstream" from various growth factor receptors and antigen-specific receptors in the immune system, and p110 delta is "pretty central" to cancer cell survival in a restricted pattern of expression.

"They represent, in my view, sort of a sweet spot for being central enough that if you hit the PI3 kinase class, you're going to have an impact," Gallatin said, though the p110 delta inhibitors aren't so central "that you have untoward target-driven toxicities." In contrast, the more widely studied p110 alpha has an impact on cancer cell survival but also on insulin signaling.

The p110 delta inhibitors selectively impact B-lymphocytes and mast cells. So as targeted therapies for cancer, they are likely to find use in hematological malignancies such as acute myelogenous leukemia, lymphomas and myelodysplastic syndrome, and in asthma and rheumatoid arthritis among inflammatory diseases.

Calistoga isn't expected to grow too large in advancing these compounds, farming out chemistry and other work to progress them to proof of concept in both areas. And down the road, after hitting those objectives, the company could opt to raise additional funding for further development, sell its assets or broaden its focus into other platforms to advance the business.

Both Gallatin and Topper came to the p110 delta inhibitors as investors for Seattle-based Frazier Healthcare Ventures, which negotiated an exclusive, worldwide license in the middle of last year and completed a term sheet with ICOS just before Lilly's $2.1 billion acquisition in the fall.

The Indianapolis company's purchase was due largely to its co-marketing arrangement with Seattle-based ICOS for Cialis (tadalafil), a PDE5 inhibitor that's sold for erectile dysfunction and is being studied in other indications. (See BioWorld Today, Oct. 18, 2006.)

Gallatin, an ICOS alum, is being joined on Calistoga's founding management team by Neill Giese, its chief scientific officer, and Roger Ulrich, its chief development officer. Both most recently served as consultants for Frazier's due-diligence work before striking the licensing arrangement in exchange for an equity stake in Calistoga, plus milestone and royalty payments down the road.

Frazier, which has incubated Calistoga to date, led the Series A round. Additional investors included Alta Partners, of San Francisco; Three Arch Partners, of Portola Valley, Calif.; and Amgen Ventures, part of Thousand Oaks, Calif.-based Amgen Inc. Calistoga's board includes Alan Frazier of Frazier, Alta's Ed Hurwitz and Rich Lin at Three Arch.

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