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Qwell Pharmaceuticals, Backed by Arch, Raises $7M for New Cancer, Inflammation Drugs

Xconomy has learned that Qwell Pharmaceuticals, a Seattle-based drug developer in stealth mode, has raised $7 million in a Series A financing. The investment was led by Arch Venture Partners and the Wellcome Trust, the world’s second-biggest charitable foundation for biomedical research.

Qwell’s goal is to develop a new family of small-molecule drugs, derived from a plant source, that have a potent ability to fight tumors and excess inflammation of skin cells, says Steve Gillis, a managing director of Arch Venture Partners and the chairman of Qwell. The technology has its roots at the M.D. Anderson Cancer Center in Houston, in the lab of Jordan Gutterman. He’s a cancer researcher who has known Gillis for more than 20 years since he served as a scientific advisor to Seattle-based Immunex. Another longtime Gillis connection, Roger S. Anderson, has been hired to be chief technology officer.

Arch clearly sees this as another ‘”big idea” company, like other firms it has seeded to produce hibernation-on-demand (Ikaria) and develop adult stem cell therapies (Fate Therapeutics). Qwell’s first-round financing could total as much as $35 million in tranches if certain milestones are met, Gillis says. Qwell, which is housed in Arch’s downtown offices on Seattle’s Second Avenue, has already shown its compounds work in animal tests, and the company aims to bring its first drug candidate into clinical trials in 2009, Gillis says.

“This is a very exciting set of molecules,” Gillis says.

Gillis wouldn’t say what plant these compounds are derived from, but Gutterman’s lab appears to have been concentrating the past two years on a triterpene glycoside with unusual properties, derived from a desert legume from Australia. The compounds from these plants, or a mix of them, have been shown to kill a variety of blood cancers and solid tumor cells, with minimal side effects in the lab dish against healthy cells, according to Gutterman’s description of the work on his M.D. Anderson biographical web page.

The Qwell drugs are thought to work by blocking one of the hottest targets in cancer research today, the PI-3 kinase, according to Gutterman’s website. If that’s the mode of action for Qwell’s drugs (Gillis wouldn’t confirm that), then Qwell would be in competition with other companies aiming for that target such as Seattle-based Calistoga Pharmaceuticals, San Diego-based Intellikine, South San Francisco-based Exelixis, and Swiss drug giant Novartis.

The intellectual property license to develop Qwell’s drugs comes from the Clayton Foundation for Research, a Houston-based foundation that financed Gutterman’s work, Gillis says. The Clayton Foundation has also provided non-dilutive capital to support the company, he says.

When describing Qwell’s potential, Gillis made an analogy to one of the biggest-selling cancer drugs ever, the chemotherapy agent paclitaxel (Taxol). This product, which exceeded $1.6 billion in peak annual sales for Bristol-Myers Squibb in 2000 before it lost patent protection, was famously derived from the bark of the Pacific yew tree. Years later, chemists were able to make it more efficiently (and make it environmentally-friendly) through synthetic methods.

Qwell’s drug candidates, Gillis says, work differently from paclitaxel, which works by disrupting rapid-fire cell division that is a hallmark of cancer cells. He wouldn’t say what mechanism the new drugs use, or what targets they are engineered to hit on cells. He did say they have novel chemical structures, and that they are more soluble in the body than paclitaxel, which is notoriously harsh and has to be mixed with a castor-oil type solution that causes side effects.

So far, Qwell’s scientists have shown an ability to extract and purify the drug efficiently from plant sources. Batches have already been made that meet FDA standards for Good Manufacturing Practices, and it is likely that chemists will be able to make them even more efficiently through synthetic means, like the Bristol-Myers drug, Gillis says. “We should have far less of a problem producing these molecules than folks did for the early clinical trials of Taxol,” Gillis says.

Qwell is staying lean for the time being with just two full-time employees and one part-timer, with most of the lab work being done by contractors, Gillis says. The company currently has three job postings online, for a director of clinical research, a director of quality and regulatory affairs, and a pre-clinical toxicology consultant.

Besides his longstanding relationship with Gillis, Gutterman has a track record as an inventor. He played a key role in the early work on developing the first approved form of interferon alpha therapy for Kaposi’s sarcoma, a rare form of cancer.

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