Axonia Seeks to Regenerate Nerves a New Way, Sidestepping Stem Cell Controversy

1/25/11Follow @xconomy

Biotech executives were on the prowl a couple weeks ago in San Francisco, many of them urgently seeking tens or hundreds of millions of dollars from Wall Street. But one of the fun, offbeat ideas I encountered during my trip was from a Kalamazoo, MI, entrepreneur seeking to nail down his first $5 million for a startup called Axonia Medical. This company is betting it can treat nerve damage in arms and legs without touching an embryonic stem cell.

Axonia’s president and founder, Harry Ledebur, told me about his dream for this regenerative medicine startup during a break between meetings with investors at the JP Morgan Healthcare Conference. He’s a molecular and cell biologist by training, so he knows the difference between an axon and neuron (more on that later). But he also has an unusual personal experience battling the problem his company is seeking to solve, as someone who has lost a leg because of a peripheral nerve injury.

If Axonia can raise the cash it seeks, the company will be off and running with a new approach to regenerative medicine. Several companies, like Menlo Park, CA-based Geron (NASDAQ: GERN) have made headlines with efforts to treat spinal cord injuries through embryonic stem cell-based approaches to regenerate new nerve cells. But these approaches are still controversial, because of the way embryonic stem cells are obtained. Axonia is seeking to help reconnect the wiring of the central nervous system a different way, essentially by using a laboratory device to grow and stretch out the key cells—known as axons—and then implanting them in an injured limb.

If these implants can take hold and spur growth of new axons in clinical trials—still a very big if—then Axonia could someday offer a new treatment strategy for the 50,000 to 100,000 people in the U.S. who undergo surgery for moderate to severe nerve damage in their arms and legs each year. Eventually, it could also be a part of combination treatment for spinal cord injury, traumatic brain injury, and stroke, Ledebur says. Axonia’s investor prospectus says the market opportunity for peripheral nerve injury alone—the most likely use of the technology at first—is $1.2 billion a year.

“This is one of the coolest technologies I’ve seen in a long time,” Ledebur says. “It’s a business opportunity that could be transformative.”

Harry Ledebur

Ledebur found the idea for Axonia while sifting through more than 2,000 different biotechnology proposals from universities and research centers, as part of his work as an executive in residence for Southwest Michigan First, a Kalamazoo-based economic development organization that seeks to recruit and build companies to the region. The Axonia technology, developed in the lab of Douglas Smith at the University of Pennsylvania, stood out for him.

The concept, as the name suggests, is all about axons. These are the long, thin cells that act as extensions of neurons, carrying electrical signals throughout the body. While humans might be able to naturally regenerate a lot of oxygen-carrying blood cells after they get knocked down by cancer chemotherapy, axons aren’t nearly so resilient, which isn’t news to anyone who has suffered a spinal cord injury or a nerve damage to an arm or leg, like combat veterans.

Scientists have long struggled to find ways to even grow these long unwieldy axons in a conventional cell culture in a lab. They can grow to be as long as 30 meters in a blue whale, Ledebur says, but they grow very slowly when damaged. Smith’s insight was to figure out how to set up what Ledebur calls “a functional living bridge, a living scaffold for the body’s regenerative processes.” Essentially, Axonia has set up a cell culture system in which it stretches out the axons by as much as 1 centimeter per day in the lab. The scaffold would contain some standard axons from a single source, which would be implanted, and then help the body re-grow more of its own axons, Ledebur says.

Smith’s lab has done most of its experiments in mice and rats, so it is way too early to start making claims about what this can do in people, and whether it can restore any ability to move an arm or leg that has been disabled. Ledebur did say the technique didn’t appear to spark any immune-system reactions in animals—always a concern with transplanted tissues. So far, the technique has shown enough promise in peripheral nerve injuries that it is ready to go into tests in primates, which is usually the last step companies need to take before they can move into clinical trials.

The investment checks haven’t arrived yet, and as with any startup trying to do something unprecedented in a period when venture capitalists have turned cautious, I had to wonder if the checks ever will arrive. But at least one early stage biotech investor in Seattle that I’ve known for a few years, David Schubert of Accelerator, says he thinks his friend Ledebur (a fellow Penn State University alumnus, he reminds me) has a decent chance of raising the dough.

“I think that the technology is quite exciting and potentially game changing in a space where the standard of care is clearly ineffective,” Schubert says. “If shown as efficacious in non-human primates and then in Phase I/II trials, I expect that the company will be an attractive candidate for acquisition by a major medical device player.”

He adds: “Harry is a very smart and thoughtful person. His drive and personal commitment to this underserved market are obvious when you talk to him. He has done his homework.”

Where Axonia ends up getting located will depend partly on who invests, Ledebur says. While he lives in Kalamazoo, and would like to start the company there, he said he’s happy to start Axonia somewhere else if that’s important to the founding investor syndicate. “We’re open to going where the best place is, based on who the investment syndicate is, and where they want to put us,” Ledebur says.

Ledebur has his eye on combining private investment capital with support from grants through the Department of Defense, which has an obvious interest in nerve repair among its many disabled combat veterans.

Ledebur can relate personally, to an extent. He showed me that a peripheral nerve injury left him with a prosthetic leg—which frankly, I never would have noticed if he hadn’t shown me. So he knows personally what it feels like, in his brain, to retain neural wiring to move his right ankle, even though there’s no right ankle to move. For folks who still have a limb, and that same kind of neural wiring intact, the thing they might really be missing is that long axon to transmit the electrical impulse down their leg all the way to the ankle. The regenerative therapies out there getting lots of attention, like those from stem cells, are really about trying to restore the function of axons that has been lost, Ledebur says. This is just another way to directly implant the critical type of cell that carries out those functions, he says.

“If you cut the nerve up here,” Ledebur says, pointing to his shoulder, “you lose your hand. Your body doesn’t have the ability to grow an axon that far from your shoulder to your hand. This technology could solve that problem.”

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