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

Xconomy New York — 

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 develop BGP-15 as an oncology drug. N-Gene would go on to raise more capital from a Hungarian venture fund and series of rights issues, Kalman says.

The positive momentum didn’t continue for long, however. Allos soon ran into serious issues, including disappointing trials of its own drug to treat breast cancer that had spread to the brain. Short on cash, Allos effectively shelved the development of BGP-15, Kalman says.

In the meantime, N-Gene’s scientists were learning more and more about how BGP-15 worked. They eventually discovered that one of the reasons the drug acted as a chemoprotectant was that it was an insulin sensitizer—it normalized blood sugar and reduced metabolic damage. In 2007, scientists working with the company published a study showing that people who suffer from insulin resistance express decreased levels of the specific heat-shock protein that BGP-15 stimulates. In mouse studies, they showed that the drug could prevent insulin resistance.

By that time, N-Gene had regained the rights to BGP-15 from Allos and begun developing it as a diabetes drug. But the competition was fierce: There were dozens of insulin sensitizers already on the market, and several more in development from the likes of Merck and AstraZeneca. “We tried to raise funds, but at that time many of the venture capitalists felt the insulin sensitization market was saturated,” Kalman says.

N-Gene’s scientific advisory board suggested the company study the drug in situations where diabetes drugs don’t work. So its researchers began investigating it as an adjunct therapy for people taking schizophrenia drugs, which commonly cause insulin resistance and weight gain. N-Gene is now in the middle of a 300-patient trial, and Kalman says initial results look promising. “It’s a potent insulin sensitizer, without side effects,” he says.

Still convincing the FDA of that won’t be easy. In 2008—in the wake of cardiovascular side effects reported in patients taking GlaxoSmithKline’s rosiglitazone (Avandia)—the FDA released new guidelines demanding that all developers of drugs to treat type 2 diabetes perform large studies to measure heart risks over time. The demands proved too arduous for companies like San Diego based Phenomix, which shut down after failing to find a partner to help finance its type 2 drug-development program.

N-Gene has a heavy-hitter on board to help it navigate its development program: chief medical officer G. Alexander Fleming, who worked at the FDA for 12 years and helped shuttle through such diabetes blockbusters as metformin. “Safety is the big question right now for all diabetes drugs,” Fleming says. Even though N-Gene’s drug is being tested in patients with schizophrenia, Fleming has no doubt that the FDA will treat it just like any other insulin sensitizer. “There is no getting around the fact that at least 6,000 patients will need to be exposed to the drug” in clinical trials to win approval, he says.

Kalman says he expects the company to finish the current trial by the end of the year, and once the data is in, N-Gene will look for a partner to help finance the phase 3 program. “The regulatory environment for diabetes drugs is changing, and not for the better for a company like us,” Kalman says. “Partnering is the likely option for us.”

Kalman believes the potential for partnering could be enhanced by growing evidence that BGP-15 may work in other diseases. In the Nature paper published April 19, the Australian scientists worked with N-Gene to show that the drug improved muscle structure, strength, and function in mouse models of Duchenne Muscular Dystrophy. There are few effective therapies for this common form of muscular dystrophy, though it is being pursued by a number of companies, including New York-based Retrophin and Bothell, WA-based AVI Biopharma.

Kalman and his staff of a dozen haven’t decided how to proceed in muscular dystrophy, he says. But he’s hopeful the recent data will help persuade potential partners to take a second look at N-Gene. “We believe we will be a target for a large company that wants to explore all the potential therapeutic directions for this technology,” he says.

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  • Harry

    I have a glucose disorder from the atypical antipsychotic risperdal. I got sick off of risperdal back in 2001, and here in the last two months of 2014 I am still sick. BGP-15 abolished the metabolic disturbance, the glucose disorder in scientific studies and experiments. Evidently BGP-15 did not pass the clinical trial phase II segment of the FDA testing in the summer of August 2013. I was hoping that drug could further eradicate the glucose injury that I have from risperdal that occurred back in 2001. THe drug holds importance for my improvement in health, potentially.