Aileron Snags $40M From Quartet of Pharma Giants to Develop New Class of Drugs

6/8/09Follow @xconomy

The biotech world will be buzzing today about something called “stapled peptides.” That’s because Cambridge, MA-based Aileron Therapeutics, a pioneering developer of this new class of drugs, has secured $40 million in venture capital from an ensemble cast of investors that includes four of the world’s biggest drugmakers.

Aileron’s latest investment round was led by the venture arm of GlaxoSmithKline and a Boston-based venture fund, Excel Medical Ventures. They were joined by venture operations representing Novartis, Roche, Eli Lilly, as well as Apple Tree Partners, and two angel investors whose names aren’t being disclosed, says CEO Joe Yanchik. It’s a big leap onto the national stage for Aileron, which was founded in 2005 by the late Stanley Korsmeyer and Loren Walensky, a pair of biologists from Harvard Medical School and the Dana-Farber Cancer Institute, and Gregory Verdine, a Harvard University chemist. Aileron has now raised about $61 million since the beginning.

The new cash infusion will go toward developing novel kinds of peptide drugs that block targets inside cells that are unreachable by conventional small-molecule drugs or genetically engineered proteins, as I described in this feature story in November. A few other peptide drugs—small fragments of proteins—are already on the market, like Eli Lilly’s teriparatide (Forteo) for osteoporosis and exenatide (Byetta) for diabetes. But most of these drugs don’t work because they get chewed up by enzymes in the body before they can hit their target. Aileron’s key insight is to “staple” these peptides in a way that holds them together in a properly folded shape in the bloodstream, protecting them and preserving the unique structure that gives them ability to hit very specific cell targets.

The big break in the past year came in November, when Aileron scientists showed in a paper in Nature that drugs from this class could hit a novel target that triggers a self-destruct mechanism in cancer cells. Then, over the next few months, Aileron kept making more progress, showing these peptides could hit targets for metabolic diseases, inflammation, and infectious diseases, Yanchik says. What’s more, Aileron’s peptides can hit not just easier targets on the surface of cells, but are nimble enough to go even deeper, blocking the transcription of RNA in the nucleus of cells—which sounds a lot like RNA interference, one of the hottest concepts in biology today.

“We’re talking about a company that owns a new therapeutic modality. It’s like if one company had all of monoclonal antibodies, or all of RNA interference to itself, except without the delivery problems,” says one of Aileron’s investors, Campbell Murray, a managing director with Novartis Venture Funds in Cambridge, MA.

“We think we’re building something unique and special,” Yanchik says.

Aileron plans to use the money to expand its staff from 23 to about 35 to 40 people this year, Yanchik says. It will look to add depth in product development, and people with diverse skills in cancer, metabolic disease, and inflammation, he says. Financially, the money means the company has enough in the bank to operate through the end of 2011.

Long before it needs to turn to investors for another round, Aileron hopes to build on the interest it expects to generate from today’s announcement. Over the coming months, it hopes to have its work published in scientific journals and form a product development partnership, and it hopes to introduce its first drug into clinical trials in 2010, Yanchik says.

One of the most unusual elements of the Aileron strategy is to make all these Big Pharma players into equity investors. Since they are normally sharp-elbowed competitors, they don’t often co-invest like this (although several drug companies invested together in pre-competitive technologies at Boston-based Enlight Biosciences last summer). There was some “unease” about the investors all getting together to invest in one company, Yanchik says.

The deal was structured to treat all the venture arms of the Big Pharma companies like traditional venture investors who are focused on returns, and doesn’t give the parent companies a first crack at intellectual property or development rights to Aileron’s drugs, Yanchik says. Aileron wanted all those drugmakers on board as investors, partly to validate the technology, but largely because it makes it easy for the company to get introduced to global directors of R&D who can help move its programs further along in development, Yanchik says.

Aileron could have raked in as much as $55 million to $60 million in equity, but some investors were turned away so that earlier investors wouldn’t have their stakes diluted in value, Murray says. There was that much interest in the company for a number of reasons, Murray says. One is that some of the major pharma and biotech companies have also been able to replicate some of the experimental work published by the Aileron team, and have seen the potential for themselves, Murray says. The company has also shown an ability to keep its drugs stable in the bloodstream for as long as 20 hours, making convenient once-daily dosing possible, Murray says.

By their nature, stapled peptides can be made to bind snugly, and tightly, against some of the trickiest targets in biology—like the p53 tumor suppressor protein, the Wnt pathway, and the Notch signaling pathway, Murray says. They could also be made into “fast-follower” anemia drugs that stimulate production of oxygen-carrying red blood cells, like Amgen’s erythropoietin (Epogen), without violating that company’s patents, he says.

That may represent the potential, but as always, proof will take time to come by. Stapled peptides haven’t generated the same level of attention as RNA interference. More scientific papers are expected to stir up interest in the next 18 months, but even if that supports the concept, the company still hasn’t proven the idea works in clinical trials. Previously, some people in the industry have wondered why, if the technology is so hot, only Novartis and Apple Tree had invested in it.

Aileron has lined up a host of additional investors now and hopes to lay the remaining questions to rest in the months and years ahead, Murray says.

“Stapled peptides are not a household name yet, but they will be,” Murray says.

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