BioWorld International Correspondent

The Genetics Co. Inc. raised CHF25 million (US$20.8 million) in a Series C funding round, CHF17 million of it up front and the remainder tied to a series of clinical development milestones.

The Zurich, Switzerland-based company aims to use the cash for further preclinical and early clinical development of a set of small-molecule drug candidates that target four different components of the Wnt signaling pathway.

"Two of them have been already validated in cancer cells so we know they play a role in cancer," CEO Harald Eistetter told BioWorld International.

Wnt genes encode glycoproteins that play signaling roles during embryonic development, but they also have been linked to cancer causation. The Genetics Co.'s lead program comprises a series of small molecules that disrupt a protein-protein interaction between the gene product of Bcl9, the human homologue of the Drosophila gene Legless, and beta-catenin, a protein that acts as transcription factor.

"The cell doesn't like to have too much beta-catenin as a transcriptional activator, because once it gets into the nucleus it triggers all sorts of nasty things," Eistetter said.

The nature of that interaction has not been fully characterized, but Bcl9 may be involved in transporting beta-catenin into the nucleus or it may itself play a role in a transcriptional complex that also involves beta-catenin. Knocking out Bcl9 leads to "dramatic" effects on cancer cell growth and differentiation.

"We may have a true handle here to prevent metastasis in the future," Eistetter said. The company hopes to move a compound from the chemical series it has developed into the clinic by 2007. "These are now undergoing efficacy testing in animal models." The company's second program targets pygopus, which also interacts with beta-catenin. It has not yet disclosed its other two programs.

The Genetics Co. now is focusing all of its drug discovery and development efforts on cancer. It is looking to out-license, sell or perhaps spin out an Alzheimer's disease program it gained through its 2003 acquisition of Heidelberg, Germany-based Abeta GmbH. The company has a series of preclinical low-molecular-weight inhibitors of beta-amyloid converting enzyme, which readily penetrate the blood-brain barrier and, Eistetter said, have a favorable polar surface area value.

"We have plenty of room for medicinal chemistry optimization of those compounds," he said. The company has decided not to pursue the program itself because its investors favor a strategic focus on cancer. A number of prospective partners will shortly evaluate the opportunity, and the company is "in the process of signing material transfer agreements" with several parties, he said.

The company is continuing to commercialize an Alzheimer's diagnostics business, which it also gained via the Abeta acquisition. At present that is yielding €500,000 (US$648,633) annually, although the company also is looking to partner that activity in order to grow it.

Nextech Venture, of Zurich, Switzerland, and Novartis Venture Fund and Varuma AG, both of Basel, co-led the round. A majority of Series B investors also participated. Should the company pull in the CHF8 million funding option, it will have raised CHF49.5 million in total funding since 2000.

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