Tetraphase Nails $45M Round to Test Pipeline of New Antibiotics

6/1/10Follow @xconomy

Tetraphase Pharmaceuticals is coming back to work with a bang after the holiday weekend. The Watertown, MA-based company has raised $45 million in a Series C venture round to support a trio of new antibiotics that are designed to be tougher for bugs to resist.

A new investor, Excel Venture Management, is leading the deal. Tetraphase’s existing backers also ponied up again—CMEA Ventures, Fidelity Biosciences, Flagship Ventures, Mediphase Venture Partners, and Skyline Ventures. The antibiotic developer, founded in 2006, has now raised a total of $80 million since it got started. The new shot of cash ought to last two to two and a half years, CEO Guy Macdonald says.

The big idea at Tetraphase, which has its roots at Harvard University, is to custom-synthesize a new breed of tetracycline antibiotics with properties that couldn’t be created with conventional fermentation methods. Tetraphase has used its new technique to synthesize antibiotics that can kill a broad variety of bugs from the two major classes of bacteria (gram positive and gram negative), or more narrowly focused and potent drugs to kill specific bugs.

Doctors need new tools like these, partly because they’ve overused the workhorse antibiotics they’ve relied on for decades. Because of antibiotic overuse, health officials are becoming increasingly fearful that many pathogens are developing resistance to multiple drugs. More than 70 percent of bacterial infections acquired in hospitals are resistant to one or more classes of antibacterial drugs. Hard data is hard to come by, since hospitals often don’t fully disclose it, but an estimated 90,000 people in the U.S. die every year from infections they get in the hospital, and treating these infections costs about $4.5 billion, according to a 2006 report by the Centers for Disease Control and Prevention.

Guy Macdonald

Guy Macdonald

All this activity has created an opening for Tetraphase, and a number of venture-backed companies like it.

“We’re very pleased to get this deal done, especially in this financing environment,” Macdonald says. “It now allows us the freedom to execute and show what we can do.”

Tetraphase, like its name suggests, is working to improve on tetracycline antibiotics, which have been powerful weapons against infectious disease for decades. The fermentation-based process typically used to create those products doesn’t give drug developers many opportunities to modify the antibiotics’ molecular structure, and so it essentially doesn’t leave them much room to engineer in new properties, Macdonald says. The Tetraphase technology, which relies on chemistry, rather than fermentation, is supposed to offer much more leeway to alter the molecule anywhere along its backbone.

One of the things that appeals to Macdonald—and surely to the VCs as well—is that such a technology can generate answers very quickly. Tetraphase cooks up about 20 new chemical structures every week, and runs them through bacterial cultures in two or three days to get a sense of how broadly effective, and how potent, they are.

Using this engine for antibiotic discovery, Tetraphase has picked three candidates for its clinical trial pipeline. The lead product, TP-434, is designed to work against a broad spectrum of bacterial infections, and is meant to be useful for physicians trying to fight an infection they haven’t yet been able to precisely diagnose, Macdonald says. Tetraphase is particularly keen on showing this drug is potent against gram-negative bacteria, in contrast to many other antibiotic companies—Theravance, Trius Therapeutics, Rib-X Pharmaceuticals—which tend to focus on gram-positive bugs, like the dreaded MRSA.

Tetraphase’s compound has passed an initial study in healthy volunteers, which showed it can be given in a convenient once-daily form, at a safe dose. Now comes the hard part. In about three to six months, Tetraphase it plans to study TP-434 in 250 to 300 patients, probably with complicated abdominal infections, Macdonald says. This study will randomly assign patients to the Tetraphase drug or to standard treatment, he says. Results ought to be available in about 18 months.

“We’re going to do a meaningful study,” Macdonald says.

That’s also going to be an expensive study, but one of the nice things about raising $45 million is that Macdonald doesn’t have to put all his eggs in one basket. A little further behind in the pipeline, Tetraphase has two different candidates it is preparing for their initial-phase clinical trials. Both of them are made as oral pills, and each of them is designed to be narrowly effective against a specific bug, Macdonald says. That’s desirable for physicians when they know exactly what kind of infection a patient has, which enables them to keep a broad-spectrum antibiotic in reserve just in case resistance develops to the narrower drug, Macdonald says.

One of these specific candidates is for complicated urinary tract infections, and the other is for community-acquired bacterial pneumonia—one of the most common infections doctors have to deal with.

These last two drugs only emerged during the last year, Macdonald says. They were so compelling that Tetraphase curtailed a Series B financing plan that was built around the lead asset, and came up with new term sheets for this $45 million Series C to finance all three programs. Obviously, if Tetraphase can prove in clinical trials that it truly has a product-discovery engine, and is not just a one-drug company, then it could have “really good M&A opportunities” in a couple years, Macdonald says.

“Nobody else out there now can do what we do,” he says.

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