TolerRx Inc. is off and running, closing a $35 million Series C round and signing monoclonal antibody heavyweight Genentech Inc. to a co-development deal for TolerRx's lead product, TRX1.
For a company barely 2 years old, going public with news of the sizable round, plus hitching its wagon to Genentech, make for a memorable day. The $35 million - giving the company a total of $58 million raised to date - frees up Cambridge, Mass.-based TolerRx to focus on the science of things. (See BioWorld Today, Oct. 24, 2001.)
"The funding allows us to do three things," said Douglas Ringler, president and CEO of TolerRx. "One, fund the clinical trials of our two lead products. We're also going to expand the marketing of our TolerMab antibody platform. And expand our research efforts so we have a better understanding of how to induce therapeutic immunologic tolerance."
The funding should fuel TolerRx for "a couple of years," Ringler said.
Genentech, of South San Francisco, invested in the Series C round as part of the TRX1 deal. Although specifics of the deal were not disclosed, Genentech did reveal that it dropped a total of $6 million into TolerRx through an equity investment and an up-front payment. There are milestone payments worked into the agreement, as well as royalties. TolerRx has a chance to be involved further, if it chooses.
"We have an option to participate in the profits and cost in the U.S.," Ringler told BioWorld Today. "We would not only share the expenses going forward, but also the profits. We can make that decision during the development process, up to a certain point."
TRX1, a humanized monoclonal antibody, is aimed at the CD4 antigen on T cells. It is designed to generate tolerogenic immune responses. A Phase I study of the product has been initiated in the UK, and Ringler said the companies would "determine the optimal time to move to Phase II," although TolerRx believes it will finish the Phase I trial "in the latter part of this year."
Another product, TRX4, a humanized anti-CD3 monoclonal antibody, is in an investigator-sponsored trial in new-onset Type I diabetes mellitus patients. Ringler said there is no plan to receive help in progressing the product.
"We have significant promise that it will show significant long-term benefit in this disease and we plan to develop this on our own," he said.
Both products were born from TolerRx's TolerMab technology, designed to modify therapeutic monoclonal antibodies so that the patient's body recognizes them as native. TolerRx said the TolerMab antibodies provide the potential for long-term use in patients with chronic diseases by reducing or eliminating the development of an immune response. And it was that difference that attracted Genentech, Ringler said.
"We had significant interest in TRX1, not only from large pharma, but large biotech companies as well," he said, adding that TolerRx chose Genentech for three reasons: Genentech is a leader in monoclonal antibodies, it has the necessary manufacturing infrastructure and it is looking to answer the same question TolerRx wants answered - namely, "How to best induce immunological tolerance therapeutically?"
Page Sargisson, manager of corporate affairs at Genentech, said, "We're increasing our research efforts in immunology, developing a wide platform of therapies that modulate different arms of the immune system. TRX1 represents one of these approaches."
With 32 employees now and an anticipated 45 to 50 by year's end, a hefty Series C round in the bank and a strong partner, TolerRx can eagerly eye the future. But it's the past that got it here, Ringler said.
"We believe the deal structure [with Genentech] is very favorable for a product that is in early clinical trials," he said. "We think the structure and total size of the deal reflects the efforts TolerRx has [put forth], all within two years of inception."
Skyline Ventures, of Palo Alto, Calif., led the Series C round. Existing investors participating in this round were HealthCare Ventures, of Cambridge, Mass.; Rho Ventures, of New York; and Vertex Management, of Singapore. New investors were Sprout Group, of New York; Artal Services, of New York; Genentech; Lehman Bros. Healthcare Fund, of New York; Yasuda Enterprise Development, Mizuho Capital and Azora Investment, all of Tokyo; and Duke University in Durham, N.C.