BioWorld International Correspondent

Elbion AG reeled in €25 million in Germany's first significant biotech financing of 2005. The company, which was formed through a management buyout of some of Degussa AG's pharmaceutical assets in 2002, concentrates on the discovery and development of small molecules that are effective against inflammatory and central nervous system diseases.

While the financing was technically a Series A investment, Elbion's legacy from Degussa means that it has an unusually advanced portfolio for a biotech company at its stage of development. Its lead compound, AWD 12-281, is in Phase II trials for chronic obstructive pulmonary disease (COPD), and Phase I trials for atopic dermatitis. Another candidate, ELB139, is in Phase II trials for anxiety disorders.

"Our clinical trial in COPD started in October 2004, and the first readout will likely be at the end of 2005," Bernd Kastler, CEO of Elbion, told BioWorld International. The company already has secured GlaxoSmithKline plc, of London, as a partner for its lead compound in the COPD indication.

"We needed a partner for the product," Kastler said. "The clinical trials and development were such that we could not do it on our own. GSK is a company with a strong franchise in upper respiratory [diseases] and treating them via inhalation. Our product is topical, thus inhaling it is necessary, and GSK has experience in that area. We think this is a very good match."

As part of the partnership, GSK also made an equity investment in Dresden, Germany-based Elbion. Kastler said the stake was about 10 percent before the present round of financing.

"COPD is still somewhat under-diagnosed," Kastler said. "That is another reason we are glad to have GSK as a partner. Their marketing muscle is in a position to educate the medical profession to discriminate between asthma and COPD, which may still be a weak point."

Elbion will use the capital to push forward clinical trials for other compounds in its pipeline. "We have a series of compounds going into Phase I over the next 24 months," Kastler said, "and we want to finance these trials and make preparations for further clinical trials. We also need money for discovery and additional activities."

He acknowledged that indications such as COPD, anxiety and inflammation encompass a diverse clinical palette. "We have an approach that comes from the molecular target," Kastler said. "As it happens, the body is not organized by indication. Instead, one of our key targets is involved in both inflammatory and CNS diseases. This is true for other targets we are working with." He added that the company clearly is not engaged in everything that is subsumed under CNS, instead working with a selected group of indications.

Bringing an anxiety treatment to market also could involve a substantial element of educating practitioners. Kastler said the company's objective is to have a partner that has the capability of undertaking that task, adding that a partner "could materialize before the end of this year or in the first half of 2006."

"We believe that we are not a platform-driven company, but rather product-driven," he said. "What we have is a close interaction among chemistry - both medical and analytical - medicine, molecular biology and pharmacology, with the dominant roles being played by chemistry and pharmacology."

The company had been financed since its founding in 2002 by management contributions, partnership revenues and what Kastler called a "farewell gift" from Degussa, cash in the company that was intended to see it through its initial stages.

The financing was co-led by 3i, of Munich, Germany; Burrill & Co., of San Francisco; and DVC Deutsche Venture Capital, also of Munich. Additional investors came from New York, North Carolina, France, Germany and Japan.

No Comments