Peptimmune Inc. reeled in a windfall amount of venture capital funding, landing $41.2 million in its first round of financing.
The Cambridge, Mass.-based firm, spun out of Genzyme Corp. more than a year ago, features four preclinical candidates. Also located in Cambridge, Genzyme at the time of the separation provided initial capitalization for Peptimmune by purchasing $5.5 million in shares of preferred stock.
"It took us a lot longer than we thought to round up the financing because it is such a difficult environment, but I think that our technology speaks for itself," Timothy Harris, Peptimmune's vice president and chief operating officer, told BioWorld Today. "If we didn't have the technology, we wouldn't have gotten the funding. We have very good programs and we have a very good intellectual property position. Unlike some other companies, we're probably a little bit more late stage than a lot of start-ups that are getting financed."
Peptimmune said its lead product, an immunotherapeutic for a skin disorder, is expected to enter clinical trials later this year. Harris said the funding, which should last several years, would be used to advance its lead product and eventually drive clinical development of other programs as well.
"The real focus of the money is going to be on the research and development side - getting these programs advanced and achieving solid milestones," he said, adding that the 14-person company expects to spend some of the funding on employee growth in scientific and regulatory positions. In the near term, though, Peptimmune remains squarely focused on its lead program.
The injectable immunotherapeutic is designed to treat pemphigus vulgaris, an autoimmune disease that causes blisters of the skin and mucous membranes. The disease affects several thousand U.S. individuals and results from an inappropriate immune response to desmoglein 3, a protein that normally holds skin cells together. Peptimmune identified a specific peptide epitope of desmoglein 3 and formulated it to induce tolerance in the patient and reduce or eliminate the immune response.
"This is a disease for which there really is no other treatment except for chronic, high-dose steroids that have debilitating side effects over time," Harris said. "From what we have heard from patients and patient organizations, there is real strong demand for something that is new and efficacious and would allow you to sidestep some of these terrible side effects. And it's a unique opportunity - I'm not really aware of any other company that is pursuing a treatment specifically for this disease."
He likened Peptimmune's interest in the therapy to Genzyme's strategy in pursuing a treatment for another relatively rare disease - Gaucher's disease.
"There was no treatment available for that disease at the time and it was a small market that was kind of overlooked by large pharma," Harris said. "Genzyme built an extremely successful business on that, so I think in a way what we're doing is very similar to that."
Genzyme is banking on that strategy paying off again. Though the latest investment reduces its ownership interest in Peptimmune to about 10 percent, Genzyme holds a first offer right to participate in the lead product's commercialization. Genzyme originally acquired Peptimmune nearly four years ago in a deal centered on the potential pemphigus vulgaris treatment. (See BioWorld Today, July 28, 1999.)
Like its lead candidate, Peptimmune's other drugs are designed to selectively inhibit immune responses without compromising normal immune function. The company said each product represents a distinct therapeutic approach.
Peptimmune's cathespin S inhibitor, a small molecule designed to treat a variety of autoimmune diseases, suppresses a specific process in autoimmune and allergic diseases. Peptimmune partnered its development in a 50-50 agreement with Huddinge, Sweden-based Medivir AB prior to the beginning of its relationship with Genzyme.
The random amino acid copolymer is a peptide treatment for multiple sclerosis that works by a similar mechanism as a drug already marketed for that indication, Copaxone (glatiramer acetate for injection), which was developed by Jerusalem-based Teva Pharmaceuticals Industries Ltd.
Peptimmune's soluble MHC Class II/Ig fusion proteins are designed to deactivate disease-specific immune responses by acting as molecular decoys for disease-inducing immune cells.
Simultaneous with the financing, Peptimmune added CEO to Robert Carpenter's list of titles, which already included company president and chairman. Still the chairman of Hydra BioSciences Inc., also of Cambridge, Carpenter co-founded Waltham, Mass.-based Geltex Pharmaceuticals Inc., bought two and a half years ago by Genzyme for more than $1 billion. (See BioWorld Today, Sept. 12, 2000.)
He remains a director at Genzyme as well.
Peptimmune's investment was co-led by New Enterprise Associates, of Baltimore, and MPM Capital, of Boston. Additional funding came from Prism Venture Partners, of Westwood, Mass.; Vanguard Ventures, of Palo Alto, Calif.; Hunt Ventures LP, of Dallas; and Boston Medical Investors Inc., a group of which Carpenter also is president.
Four investor representatives were added to Peptimmune's board following the financing: New Enterprise's Jim Barrett, MPM's Luke Evnin, Prism's John Brooks and Vanguard's Hugh Rienhoff.