N-Gene Digs Up Funds to Boost “Heat Shock” Drug in Diabetes and MD

4/25/12Follow @arleneweintraub

Drug development is never easy for cash-strapped biotechs, but for those wanting to make new drugs to treat diabetes—where the FDA demands clinical trials that are long and expensive—it can be nearly impossible. New York-based N-Gene Research Laboratories is one of those companies. The scrappy, 15-year-old outfit “has always worked in financial hypoxia,” says CEO Gabor Kalman. N-Gene has been studying its lead compound in diabetes for nearly a decade, but says Kalman, “We had to slow down the clinical trial because of lack of resources.”

N-Gene, which has raised about $35 million to date, hopes to be able to announce a new funding round in the coming weeks. The company plans to use the money to complete the mid-stage trials of its diabetes drug, called BGP-15, and to begin planning the large, pivotal trials that will be required for FDA approval, Kalman says. A fresh round of funding will also help the company examine the potential of BGP-15 in other diseases, including the inherited disorder Duchenne Muscular Dystrophy. Last week, the prestigious journal Nature published data from a team of Australian researchers showing that BGP-15 was able to reduce muscle damage and increase strength, endurance, and lifespan in animal models of the disease.

BGP-15 is part of a novel class of drugs known as heat shock protein inducers. Heat shock proteins get activated when cells are exposed to certain stresses, such as an elevation in temperature. These proteins act as chaperones for other proteins, and thus play an essential role in cell survival. Researchers at N-Gene discovered that inducing one type of heat shock protein reduces insulin resistance—which could help patients with type 2 diabetes control their blood sugar.

Getting from molecule to finished drug has been a long, winding, and financially challenging process for N-Gene. The company was founded in 1997 in Hungary with $2.2 million from “the three Fs: friends, family, and fools,” Kalman says. Its scientists initially developed BGP-15 as a “chemoprotectant” —a drug that’s designed to protect cancer patients from the toxic side effects of chemotherapy.

But N-Gene’s founders needed more money, and they quickly realized they wouldn’t get very far in Hungary. “For dedicated life-sciences funds, Eastern Europe is not on the map,” Kalman says. “No matter how good your science is, it’s too much of a jungle. It was very tough for us.” So N-Gene moved its headquarters to New York City, where it continued to study the mechanism of BGP-15 while hunting for more funding.

In 2001, N-Gene raised $6 million in a Series A round led by fellow Hungarian and business magnate George Soros, a longtime biotech investor who had supported an earlier iteration of N-Gene called Biorex. Shortly thereafter, the company sewed up a licensing deal with Westminster, CO-based Allos Therapeutics, which intended to … Next Page »

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