At the end of last year, the venture fund established by Domain Associates and Russia’s Rusnano disclosed that they had invested $20.6 million in San Diego-based Lithera, an aesthetic biotech developing a drug to reduce the fat tissue that builds up under the skin. Now the six-year-old startup is taking the next step.
In a statement today, Lithera says it has initiated a large, mid-stage trial of the drug, an injectable version of salmeterol xinafoate, a selective beta agonist developed for localized reduction of fat tissue. Salmeterol already is used as an aerosol inhalant for treating asthma (marketed as Serevent). Lithera says top line data from its 500-patient trial are expected by the end of September.
In a phone call earlier today, Lithera CEO George Mahaffey says Lithera has revised its initial formulation of salmeterol to optimize its use in reducing abdominal fat tissue in normal, healthy people who are under 45 years old. Women account for about 87 percent of the potential market. The current standard of practice for such people, who find it hard to lose their “love handles” even with exercise and a healthy diet, would be liposuction, Mahaffey says.
The Lithera CEO says he believes the company’s market has plenty of room to grow, because many women who are unwilling to undergo liposuction would be more willing to try an injectable drug to shrink their abdominal fat. In any case, liposuction ranks as the top cosmetic surgery in the United States, with more than 350,000 procedures done each year.
Mahaffey says he’s also encouraged by the performance of another aesthetic biotech, Kythera Biopharmaceuticals (NASDAQ: KYTH), a Calabassas, CA-based company developing sodium deoxycholate as an injectable drug for shrinking fat under the chin. Since Kythera completed its IPO on Oct. 16 (at $16 a share), the company’s valuation has climbed—Kythera closed today at $23.32 a share and Kythera now has a market valuation of nearly $425 million.
“We don’t see ourselves as competitors of Kythera,” Mahaffey says, explaining the two companies are addressing different areas of “bothersome fat.”
Mahaffey says the $20.6 million Series C round of funding announced in December was divided into two tranches, with the initial closing amounting to $11 million. A second tranche expected to close later this year could raise as much as $15 million more—and could extend the round to $25 million or more.
The financing “gave us the ability to begin and complete the trial we began this morning,” Mahaffey adds. “It’s a very large trial, and we believe it will be a very definitive data set” that can be used to determine proper dosing. Because salmeterol already has FDA approval for treating asthma, Mahaffey says he believes Lithera has a drug with zero safety issues,” and the company should be able to move relatively quickly to late-stage clinical trials.
By the time the mid-stage trials are completed later this year, Mahaffey says, Lithera should be in a good position to review the data in a meeting with FDA regulators. At that time, Mahaffey says, “an IPO would be something we’d have to contemplate.”
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