Euthymics, Led by Orexigen Vet, Nabs $24M for Depression Drug With Fewer Side Effects
Boston has a new startup working on what could help people battle depression, even if they didn’t respond to prior treatment, and without the weight gain and sexual dysfunction side effects that have plagued the field for years.
Cambridge, MA-based Euthymics Bioscience is off and running toward that goal, having secured the initial installment of a Series A venture financing that could total $24 million if the company hits a series of milestones. The deal was led by Novartis Venture Funds and Venture Investors, and the syndicate includes Hambrecht & Quist Capital Management, GBS Venture Partners, and the State of Wisconsin Investment Board. The company is led by chairman Campbell Murray of Novartis Venture Funds, and CEO Anthony McKinney, a former executive at San Diego-based Orexigen Therapeutics (NASDAQ: OREX), and Genzyme (NASDAQ: GENZ).
The company (pronounced you-THIGH-mix) takes its name from the Greek word for a good mood. The company got started by spending $2 million to acquire what was left of Somerset, NJ-based DOV Pharmaceutical. What DOV learned, as it was running out of money in late 2008, was that it might have developed the first drug that strikes a delicate balance by affecting three neurotransmitters in the brain—serotonin, norepinephrine, and dopamine. Early data from a study of 56 patients suggested the DOV product might be able to adjust those neurotransmitters in just the right way to get the attractive combination of a drug that improves mood, without causing sexual dysfunction, weight gain, or cognitive impairment that sometimes happens with an earlier generation of depression meds.
If this can be proven in clinical trials, then Euthymics could have an important new treatment for a worldwide market estimated to be worth $20 billion a year.
“People have tried to do this for 20 years, and no one has been able to get in one molecule that modulates all three transmitters,” McKinney says.
Euthymics has an interesting backstory. While DOV was struggling during the fall of 2008, and investors were focused on its drug candidates at a later stage, the company quietly generated some promising early results from a compound then called DOV 21,947, and now dubbed EB-1010. Orexigen CEO Gary Tollefson, who had a long record at Eli Lilly working on huge neurology drugs like fluoxetine (Prozac) and duloxetine (Cymbalta), heard the buzz about this triple-acting anti-depressant. Tollefson, who was gravely ill with cancer at the time, looped in his chief operating officer McKinney, as they sought independent statistical validation for whether the DOV finding was legit.
They liked what they saw from the clinical trial, and also the business opportunity. Many of the older antidepressants have gone generic, and they don’t work for as many as two-thirds of patients. Some psychiatrists have experimented with combinations of generic drugs that work against serotonin, norepinephrine, and dopamine, but the regimen is hard to follow, and nobody had put a drug together that really worked as a single pill. Others had tried to do it with an equal ratio of effect against the three transmitters, and found it caused too much nausea or heart side effects—DOV’s innovation was to find the right ratio to minimize the toxicity of the triple threat, McKinney says.
Euthymics has pulled together an experienced team to pursue this new drug against depression. The scientific co-founder is Franklin Bymaster, who spent 33 years at Lilly working on many of its greatest hits for depression and schizophrenia. And Mauricio Fava, the vice chair of psychiatry at Massachusetts General Hospital and a leading authority on depression treatment, has agreed to be the principal investigator of the next big clinical trial for Euthymics.
That study is the main task on the company’s agenda. Plans are to enroll 300 patients who didn’t respond well enough to a first round of conventional treatment with a selective serotonin reuptake inhibitor, McKinney says. The trial should be ready to get underway before the end of next June, and produce results by the middle of 2012, he says.
That’s when Euthymics will reach a turning point. If the data are promising, it could choose to just get acquired by a Big Pharma company. Or, it could decide to keep going on its own, raising more capital for another rigorous trial that will be required for the drug to win FDA approval. The U.S. drug regulator is likely to require data from at least 1,500 patients in clinical trials, so this is going to take Euthymics, or somebody else, a lot more than $24 million to get through the hurdles to become a marketed product.
This always feels like a dumb question because of Boston’s strength as a biotech hub, but I did feel the need to ask McKinney why the new company is setting up in Boston. The answer, obviously, is that the principal investigator is in Boston, the company’s contract research organization is in Boston, and two of the company’s four venture backers are in the Hub as well. While we talked yesterday afternoon, McKinney was looking for a new place to live in Massachusetts.
“Boston is a happening place to be when it comes to the small molecule depression space,” McKinney says.
While depression is the main focus of the company, McKinney pointed out that there was a reason he didn’t just take a license from DOV to its lead drug. Euythmics bought the whole company in order to get some other assets which could prove useful for other neurology conditions like attention-deficit hyperactivity disorder, obesity, anxiety, obsessive compulsive disorder, and drug addiction.
Of course, those could just be a few proverbial “shots on goal” that never amount to anything. The first order of business will be to prove in a larger clinical trial that what DOV saw was no fluke, and it’s the kind of thing a company as big as Novartis would like to own.
“You don’t see $24 million Series A deals that often,” McKinney says. “This drug has a great efficacy profile, without some important side effects, and a team that knows how to develop antidepressants. With a syndicate of this quality, you can tell this is something important.”