Seattle-based Cardeas Pharma just raised a lot more cash to fight a big problem that hospitals wrestle with every day, and which they’d rather not say much about publicly.
Cardeas, the startup led by prolific drug developer Bruce Montgomery, has raised the healthy sum of $34 million in its Series B venture financing, Xconomy has learned. New investor H.I.G BioVentures led the round, and was joined by existing investors Avalon Ventures, Novo A/S, Devon Park Bioventures, WRF Capital, as well as new investor Delphi Ventures. The company has now raised a total of $46.5 million for its drug development plan since it scraped together its first $1 million in February 2011. This latest round is the biggest financing for a Seattle-area biotech since Alder Biopharmaceuticals pulled in $38 million in April 2012.
All the money is rallying around Cardeas’s plan to turn a couple of generic antibiotics into a first-of-its-kind aerosol against lung infections people get in the hospital, often when they are on ventilators in intensive care units. These infections can be treated with intravenous antibiotics, but patients end up staying several extra days in the hospital, at about $10,000 to $15,000 for each day a patient spends in a U.S. intensive care unit. Good data are a bit hard to come by—there’s no well-financed patient advocacy group for people who get ventilator infections—but estimates are that 250,000 to 300,000 patients a year in the U.S. get this complication, which raises risk of serious complications and death, according to a 2006 review by University of Virginia researchers.
“We’ve thought this through very carefully. It’s a good bet. I’m happy, I’m comfortable with it,” Montgomery says. “If we win, other people will probably copy us. It’s a lot easier to copy than it is to pioneer.”
Montgomery has had big success in the past with turning a couple of antibiotics into aerosols for the treatment of cystic fibrosis, a deadly lung disease that affects about 30,000 people in the U.S. Those drugs are currently marketed by Novartis and Gilead Sciences. But if he and the team at Cardeas are successful in their quest against ventilator-associated infections, they could end up with a product that gets much broader use.
No one has ever come up with an aerosol antibiotic against the bugs that creep in while a person is stuck on a ventilator. When the infection hits, patients can currently get intravenous antibiotics known as carbapenems, which are powerful antibiotics of last resort against most gram-negative bacteria. Cardeas’s big idea is to take a couple old antibiotics—amikacin and fosfomycin—that are “broad-spectrum” antibacterials, meaning they can kill lots of different kinds of bugs, which is useful in the early days of an infection, when a physician doesn’t know exactly what kind of bug he or she is trying to kill.
Cardeas’s innovation is to turn the antibiotics into an aerosol form that’s designed to get them to penetrate deep into the sputum in the lungs where dangerous bacteria cause havoc. Pseudomonas aeruginosa, Acinetobacter baumannii and Klebsiella pneumoniae are the “three bad guys” that Cardeas is most focused on, and which cause some of the more troublesome infections found in hospitals, Montgomery says.
Cardeas has obtained two key pieces of evidence in its early days that prompted this round of investment interest. The company identified 62 different bacterial invaders that are considered “worst of the worst” and determined that its antibiotic combo can kill them at “reasonable” concentrations in the petri dish, Montgomery said, noting that data on this study was presented this week at the American Thoracic Society meeting in Philadelphia.
Second, the company showed that its nebulizer, developed with help from Germany-based Pari, was able to deliver concentrations into the lungs that are 50 times higher than necessary to kill the bugs. The nebulizer takes about 12 minutes to deliver the drug to a patient on a hospital ventilator, Montgomery says. (You can search on “author” and “Montgomery” here on the ATS website for the full results).
That data, Montgomery’s track record, and the knowledge that hospitals are becoming more motivated to fight ventilator-associated pneumonias, helped the company raise this new round of cash, says Thong Le, a managing director with WRF Capital.
The new money will be used to help Cardeas test its concept in a much more rigorous way. The company is seeking FDA clearance to start a mid-stage clinical trial in July that will enroll about 150 evaluable patients, Montgomery says. The study will give all patients the best available IV antibiotics, and randomly assign them to get the Cardeas drug on top of that, or a placebo. The main goal will be to show that the Cardeas drug is superior to existing antibiotics on a respiratory disease severity score, and the study will also collect data on secondary measurements such as, time spent on the ventilator, time spent in intensive care, length of hospital stay, and death rate. By designing the test to demonstrate superiority, Montgomery is hoping to motivate doctors to enroll patients in the study, and to eventually prove that the brand-name drug can someday justify a far higher price than today’s generics.
Cardeas isn’t the only company, of course, thinking of ways to fight pneumonia in hospitals. Bayer has a competing aerosol antibiotic in the works for ventilator-associated pneumonia, but no one has yet won FDA approval for such a treatment, Montgomery says.
Part of the reason no one has come along yet in the field is that “most antibiotic companies don’t understand aerosols, and there hasn’t been a good delivery system,” Montgomery says. Often, the particles are so big that they get stuck in the breathing tube, and don’t get deep in the lung. Cardeas is using is a modified form of the Pari e-Flow device that he and his team used before to develop aztreonam lysine (Cayston) to fight lung infections in cystic fibrosis patients. “We had to develop a good delivery system, and that’s a big breakthrough,” Montgomery says.
Cardeas expects to have results from this study, which follows patients during a 28-day observation period, about 15 months after the trial gets underway this fall, Montgomery says. If the company passes that study, showing that its drug is superior to existing antibiotics in patients, then the company will clearly be worth much more, and be able to raise more money on favorable terms for the final stretch run of clinical trials needed for FDA approval.
The company is so confident that it will be in a good position two years from now, Montgomery says, that he turned away an additional $50 million worth of investment at today’s terms. “All we need to do is get to next milestone, and we’ll have another value inflection point,” Montgomery says.
Cardeas currently only has nine employees, and doesn’t plan to do much hiring with the new money, leaning instead on a network of contract research organizations to handle much of the trial work, Montgomery says. He’s not going to move into fancy new offices, he says.
“The cholesterol score on this company is about 20. We’re lean,” Montgomery quips. “Nowadays you can outsource things you couldn’t do 10 years ago.”
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