By Debbie Strickland
Metabasis Therapeutics Inc. raised $13 million in the company's first financing since spinning of from Sicor Inc. a year ago.
Investors in the San Diego-based company were MPM Capital Management and Interwest Partners. "We're excited about the investors that came in on this round," said Paul Laikind, chairman, president and CEO. "They're very high-profile."
Metabasis now has sufficient cash to last two years, even as its first product nears clinical trials, according to Laikind. That's because partner Sankyo Co. Ltd., of Tokyo, is responsible for funding trials under a 1997 agreement that has been extended through 2001. The deal covers a new class of oral diabetes drugs that selectively inhibit the gluconeogenesis pathway, which is responsible for the abnormal liver overproduction of glucose in patients with Type II diabetes.
The companies have selected a lead compound for clinical testing and are continuing to work on backup candidates. Metabasis retains co-promotion rights in North America and will receive development milestones, as well as royalties on any eventual sales.
Sankyo led the most recent major breakthrough in Type II diabetes drugs, the insulin sensitizer class. The company and partner Parke-Davis (now a unit of Pfizer Inc., of New York) helped change the approach to treating the disease to one of managing insulin resistance with the 1997 introduction of Rezulin (troglitazone; voluntarily withdrawn in March).
"It's been a great partnership," Laikind said "They're getting a lot out of it is as well. Diabetes is a very important area for them, and they've been very supportive as we've worked to rebuild and grow."
Indeed, funding from Sankyo helped the company get through its first year of independence. The partner provided advances on milestones and a convertible loan. Sankyo also has an equity stake, as does Sicor, of Irvine, Calif.
Prior to divesting its majority ownership of Metabasis through a management buyout, Sicor had largely left biotechnology behind, focusing on such areas as generic chemotherapies and production of bulk drug substances. The company was looking to clear the start-up operation's losses from its bottom line, while retaining an interest in any eventual success.
Metabasis now is looking for new partners for a liver-targeting technology called HepDirect that emerged as a byproduct of the company's liver-focused diabetes research. "We take a compound and with a fairly simple couple of steps make a prodrug that is cleaved specifically by an enzyme found predominantly in the liver," Laikind said. A key advantage is that "we can deliver the phosphorylated compound directly."
The platform technology could be partnered widely with companies that have compounds aimed at liver diseases, including cancer and viral infections.
"With HepDirect," Laikind said, "we could take a partner's compound they've developed for hepatitis A or hepatitis B and modify it so it's liver-directed and potentially more active."
The company has moved ahead independently on HepDirect compounds and expects to have one ready for the clinic as early as 2001. Discussions are under way with potential partners for these compounds.
With the financing, the company, now at about 50 employees, will likely add 10 to 15 people over the next year.