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SQZ Biotech Shifts to Therapy Development with $5M Series A

Xconomy Boston — 

Scientists lucky enough to develop a breakthrough technology often still face the difficult task of commercializing the product. Do they license the technology to researchers? Do they develop it themselves, or maybe instead find a bigger, more experienced partner?

SQZ Biotech finds itself today in such a time of transition. The Boston startup, founded through discoveries made by Armon Sharei at the labs of MIT’s Bob Langer and Klavs Jensen, has scrapped its original plan to seek profitability by selling the company’s tools to universities and hospitals for research.

Though it will continue some of those partnerships, SQZ (pronounced “squeeze”) has set its focus on discovering immuno-oncology therapies with its method of cellular engineering, according to Sharei. SQZ now has $5 million in the bank to do it, too; it announced a Series A round led by Polaris Partners this morning, with participation from 20/20 Healthcare Partners and other unnamed investors. The financing is small for biotech, though Sharei says the money is enough to get to a point where SQZ can either partner with a larger company, which may provide capital, or pursue a therapeutic course of its own. If the latter happens, the company could always seek more funding.

“We’re in it for the long haul on the therapeutic front, so we have our eyes on hopefully much greater profits later,” said Sharei, who took over as CEO of SQZ in January. “We felt there was a lot we could do with our ability to engineer these cells for therapies with some of our programs we’re pursuing internally.”

SQZ plans to use the funding to test its technology, called CellSqueeze, in both animals and with human immune cells in vitro. In addition to internal tests, the company already has partnerships with Big Pharma and biotech companies, which are examing the potential of the technology in their own clinical programs, Sharei says. He declined to name any of the companies or their clinical focus.

“Our thought was to kind of take in what [funding] we require right now to push those programs and get an answer on what might be our first big splash in clinical trials, and then raise money as needed,” Sharei says. “The idea right now is to figure out exactly which concept we want to take to the clinic first and have that in vivo proof of concept necessary to justify to the FDA.”

It’s possible SQZ could pursue its own concept, as well as one from an external partner, he says.

Founded in 2013, SQZ’s technology came from an accidental discovery, as Xconomy’s Ben Fidler reported last year. Sharei was trying to develop a method of injecting cells with molecules such as proteins, peptides, and nucleic acids that may potentially work as therapies.

Instead, he discovered that slimming down the channel that cells passed through before injection, subsequently squeezing the cell, actually opened the cellular walls enough for the molecules to enter. “It was one of those things where we were scratching our heads for like six months and did all the control experiments we could imagine,” Sharei says.

You can read Ben’s explanation of how Sharei built CellSqueeze with microfluidic chips, some potential uses of the technology, and how it led to $400,000 in non-dilutive grant money from MassChallenge. Before the Series A financing, the company also raised $1 million in seed funding and another $1 million in grants that are still being funded.

In essence, SQZ and its partners are now using the technology to see how they can best direct these cells and the molecules in them to impact the field of immuno-oncology, Sharei says. Eventually, SQZ may add other diseases to its focus, such as autoimmune or any infectious disease, he says.

Right now, the company has a few targeted concepts it is focusing on as it seeks to approach the FDA with a plan to develop a marketable therapy, Sharei says. SQZ may be able to pursue one of those methods in clinical trials, and whether it does so on its own or with a partner will determine whether it needs more funding, he says.

Sharei took the helm of SQZ from Agustin Lopez Marquez, a close friend who Sharei said helped incubate the company through its seed stage while Sharei finished post-doc work at Harvard Medical School. It’s Sharei’s first real experience with the corporate world, let alone at the executive level—he interned once at Novartis, he says.

Still, Sharei says he feels confident in building relationships and making difficult decisions about partnerships—such as, potentially, the amount of future upside he may have to sacrifice to guarantee early success. SQZ is currently working on a “handful” of pharma and biotech partnerships, Sharei says, declining to reveal more specifics.

He won’t be alone at the top, however. Amy Schulman, a partner at Polaris, has become the executive chair of SQZ’s board of directors. Schulman, who ran Pfizer’s $4 billion consumer healthcare business before joining Polaris, has been involved in helping SQZ navigate the business world, Sharei says.

“It’s really just kind of uncharted territory of what can you tell these cells to do now, that you can deliver these classes of materials,” Sharei says. “There are things in there that could enable therapies we haven’t thought of before.”