Provid Pharma Leans on MS Society’s Venture Fund to Boost Lead Drug
North Brunswick, NJ-based Provid Pharmaceuticals could be a case study in biotech bootstrapping. The company, founded in 2001, had been subsisting largely on angel funding, grants from the National Institutes of Health and the Small Business Innovation Research arm of the U.S. government, and an early collaboration with San Diego-based Sequenom (NASDAQ: SQNM). Then, in 2009, the tiny biotech caught the attention of the National Multiple Sclerosis Society in New York, which invested in Provid through its venture philanthropy fund, Fast Forward.
That investment is starting to yield dividends for Provid. In May, the company will release data on its lead drug to treat MS at a conference of the American Association of Immunologists in Boston. The data, from experiments done in cellular models, is still very early—the company is about a year away from filing to the FDA for permission to run its first human trials, says Gary Olson, co-founder and CEO of Provid. Still, without the money from the MS Society, which included a second tranche in 2010, it’s unlikely Provid would have gotten this far, Olson says. “Because we’re such a small company, we really are relying on external resources to fund this project,” he says.
Financing from disease-related organizations is becoming an increasingly important source of support for young biotechs. At Xconomy’s biotech forum in Boston on April 4, Rick Winneker of the Leukemia & Lymphoma Society said his organization is supporting 400 research projects, including several in biotech and pharmaceuticals. Other not-for-profit organizations that invest in drug-development programs include the Multiple Myeloma Research Foundation, the Juvenile Diabetes Research Foundation, and the Cystic Fibrosis Foundation.
Timothy Coetzee, president of the MS Society’s Fast Forward, says his organization started its fund in 2007 to fill a gap in life sciences financing. “Our sense was there were programs like Provid’s that were in early pre-clinical development, but were challenged by the Valley of Death,” Coetzee says, referring to the period when companies are too advanced to secure federal funding but still too young to generate interest among venture capitalists. “We see ourselves using philanthropic capital to move programs forward.”
The drug that the MS Society is fostering, called PV-267, was designed as a completely new way to fight the disease. PV-267 targets proteins expressed by a group of genes called the Major Histocompatibility Complex (MHC). These MHC proteins are expressed on many cells in the body and are vital to normal functions. But in about 60 percent of MS patients, some MHC molecules go awry: They become attached to fragments from the myelin sheaths that protect nerve cells. That triggers a drastic immune response against the protective coating around the nerves, which in turn leads to neurodegenerative symptoms characteristic of MS, such as loss of vision and balance.
PV-267 is a protein-based drug that prevents the myelin fragments from binding to MHC. Provid’s scientists designed the drug so it would target the particular class of MHC molecules associated with MS, but would leave all normal MHC functioning alone. Provid’s goal was to improve on current drugs for autoimmune diseases, which act so broadly on the immune system they can cause dangerous side effects. “We had to make sure this drug did not generate its own immune response,” Olson says—a task that was particularly urgent in the wake of reports of a potentially fatal brain disease reported in some patients taking natalizumab (Tysabri), Biogen-Idec’s hit MS drug.
Provid, founded by veterans of Roche and Praecis Pharmaceuticals, collaborated on the development of PV-267 with Thomas Forsthuber, an immunologist at the University of Texas in San Antonio, who will be presenting the data next month in Boston. But there were many challenges along the way. Provid initially had some funding from a company called Diamed. Then Diamed was acquired in 2007, and its partnership with Provid was called off.
The PV-267 development program essentially stalled, until Olson came across the MS Society’s Fast Forward program. Coetzee recognized the promise of Provid’s technology and believed the society could help advance the drug towards human trials. “Provid had the chemistry, but it lacked access to the resources it needed to move into a full-fledged drug-development program,” he says.
Fast Forward made one investment in Provid in May 2009, and a second in November 2010. Coetzee won’t reveal the size of the total investment, except to say that Fast Forward generally puts between $250,000 and $1 million into companies, and that the Provid deal is in that range. “We’re not in the venture mindset of doing round after round,” Coetzee says. “This is passion capital. Our goal is to bring perspective and resources to move programs forward.” As part of the partnership with Provid, Fast Forward received warrants to purchase shares in the company.
The MS Society’s strategy with Fast Forward is to “de-risk” drug-development programs by paying for animal studies and other research designed to better define how molecules work and what their potential side effects might be, Coetzee says. Although Fast Forward is still young, he’s able to point to a handful of successes. One of the fund’s holdings is Apitope, a U.K. company that subsequently signed a $200 million licensing agreement with Merck Sorono. Fast Forward also invested in Canbex Therapeutics, another U.K. company, which recently won an award worth nearly $3 million to move its drug to treat MS-related muscle spasms into human trials.
Provid’s Olson says the connections he’s made through the MS Society have been almost as important as the money from Fast Forward. “There have been occasions where I’ve been invited to do presentations at conferences about what we’re doing with the funds,” he says. “That’s been a very good way of being introduced to people in the MS community, with the blessing of Fast Forward.”
Provid will eventually need to raise money from more conventional sources, such as venture capitalists or Big Pharma companies, Olson concedes. The money from Fast Forward is helping the company move PV-267 closer to the point where it will be interesting to those sorts of investors, he says. “We’ve had some discussions, but we’re not yet at the stage of being able to do a deal,” Olson says. “Because ours is a non-validated mechanism, most investors would like to see human data before putting significant amounts of money behind the project.”