Alder Biopharmaceuticals has nailed down the biggest round of venture capital the Seattle biotech community has seen in a long time.
The Bothell, WA-based antibody drug developer is announcing today it has raised $38 million in a Series D financing led by new investor Novo Ventures. All of Alder’s previous backers— Sevin Rosen Funds, Ventures West, HIG Ventures, TPG Biotech, Delphi Ventures, and WRF Capital—also joined the new round. Alder, founded as a bootstrapped company in 2004, has now raised a combined $105 million in its four venture deals, and has also pulled in at least another $100 million in cash through a partnership with New York-based pharma company Bristol-Myers Squibb (NYSE: BMY).
The new cash infusion will be used to help Alder hire another 10-15 people and move ahead more aggressively with clinical trials of three drug candidates for patients with cancer, migraine headaches, and high cholesterol. The big idea at the company remains unchanged: to manufacture antibody drugs in fast-dividing yeast cells instead of traditional mammalian cells. Alder looks to apply that technology to make “fast-follower” antibody drugs that are faster and cheaper to produce than its rivals’ products, and which are engineered to provide certain advantages to patients, like fewer injections. The venture financing for Alder is the biggest in Seattle biotech since Calistoga Pharmaceuticals raised $40 million in June 2010.
“We’re putting ourselves in a position of strength moving forward,” says Randy Schatzman, Alder’s co-founder and CEO. “The beauty is while ALD518 [the company’s first drug candidate] is in the clinic and succeeding, the guys in the lab have been successful in making other drug candidates. This financing allows us to push them forward.”
While Alder isn’t disclosing its new valuation as part of the financing, the company is now worth more than it was the last time it raised money, meaning this is a so-called ‘up’ round, says Mark Litton, the chief business officer.
Thong Le, a founding investor in Alder from WRF Capital, and a board observer, says Novo made sense as the new lead investor because it understands the field, has deep pockets, and patience. Even though Le says Alder had “plenty of cash” on its balance sheet to keep operating, raising more now means will enable it to put its foot on the gas in clinical development, without worrying about putting programs on hold if other partnerships are slow to materialize.
“The reason they pursued this financing was to control their own destiny,” Le says.
Alder’s first big break on the national scene came in November 2009 when Bristol-Myers agreed to pay $85 million upfront and as much as $1 billion in milestones over time for the right to co-develop Alder’s ALD518 (aka BMS-945429) for autoimmune disorders like rheumatoid arthritis. Although that drug has shown some compelling clinical trial results, it isn’t about to hit the market overnight. Alder’s promising clinical trial results for rheumatoid arthritis were achieved with an intravenous form of the antibody, which means patients needed to come to the doctor’s office, which isn’t nearly as convenient as other products that patients can inject themselves at home or work. So Alder and Bristol have worked the past couple years to reformulate ALD518 into a more convenient, self-injectable form as it heads into the final phase of clinical trials required for FDA approval.
Part of the Bristol-Myers deal, however, enabled Alder to retain 100 percent of the commercial rights to ALD518 as a treatment for cancer-related conditions. The drug, which is made to target an inflammatory protein called IL-6, isn’t intended to directly attack tumors, but is thought to help improve the quality of life for patients by tamping down excess inflammation that leads to excessive fatigue and other complications of cancer care. Alder currently has two mid-stage clinical trials ongoing of ALD518 for treating cancer-related conditions.
One trial is for graft-versus-host-disease, a sometimes deadly immune system reaction patients can get with bone-marrow transplants. The other is for oral mucositis in patients with head and neck cancer. That’s a condition in which patients get mouth sores from treatment that are so severe they can’t swallow, and have to quit taking the standard meds. Alder’s hope is that its drug can reduce the sores enough so that patients will be able to stay on their other meds, which are keeping them alive, Schatzman says.
Those cancer uses will only consume a portion of the $38 million that Alder just pocketed. Much of the rest will go toward drug candidates for migraine headaches and high cholesterol.
The migraine drug, called ALD403, which I first described in a feature story in these pages a year ago, is designed to build on some trailblazing work done by pharma giant Merck, says Alder chief scientist John Latham. Migraine headaches are obviously a common ailment—an estimated 30 million Americans complain of them in varying degrees. Many people get treated with triptan drugs which are now available as cheap generics. But drugs in this class don’t work for everybody, and they are supposed to be taken only after symptoms appear, which leaves the door open for painful “rebound” headaches when the drug washes out of people’s bloodstream. And if people take the triptan drugs chronically to prevent rebound headaches—which they aren’t supposed to do—they can get significant side effects like high blood pressure.
Researchers have sought a better way of treating migraines, especially for those who get them most often, by hitting a target called calcitonin gene-related peptide (CGRP). The new target doesn’t work like triptans, which constrict blood flow to the brain.
Merck charted a course with oral pills telcagepant and MK-3207, which were designed to hit CGRP, Latham says. The company’s trials showed that its drug, by stopping blood vessels from dilating too widely, enabled “really good pain management” in trials of about 4,000 patients. But Latham says Merck halted development of its first version CGRP inhibitor after seeing side effects associated with the class of compounds it was using, which prompted it to try again with a next-generation form of molecule. That prompted Alder to think about how it could create a different kind of product profile—a self-injectable antibody drug against CGRP, given as little as once a month, that stays active in the bloodstream and prevents frequent migraine headaches from occurring.
Alder isn’t the only company pursuing the new idea of an injectable antibody drug for migraines. Cambridge, MA-based Arteaus Therapeutics, a spinoff from Eli Lilly backed by Atlas Venture and OrbiMed Advisors, has a migraine prevention drug in clinical trials, and Pfizer has one in clinical trials as well, Latham says. Alder’s candidate is expected to enter its first clinical trial before the end of this quarter, Schatzman says.
A bit further behind in development is an Alder antibody that’s designed to hit one of the hottest targets in biology—PCSK9. Other drugmakers like Amgen and Regeneron Pharmaceuticals have wowed cardiovascular disease researchers in recent months, presenting data from clinical trials that suggests anti-PCSK9 antibodies can greatly reduce LDL cholesterol, possibly creating a potent new class of cholesterol-lowering drugs. And while blood-cholesterol levels can fluctuate a lot if people forget to take cheap, generic statins on a regular basis, Alder’s drug is designed so it should be able to keep cholesterol low for months at a time, through an injection patients can give themselves at home.
Last year at this time, Alder said it hoped to move the anti-PCSK9 antibody into clinical trials by late 2011 or early 2012. That didn’t happen, partly because of the compelling data Alder saw when its competitors published results in top peer-reviewed journals. Armed with more information about what it was up against, Alder went back to ask its scientists to come up with a molecule with even more attractive properties. So Alder now hopes to move its PCSK9 program into the clinic by late 2012 or early 2013. And while time is money in drug development, Schatzman says he wants to make sure his team gets this drug exactly right before spending the big bucks on clinical trials.
“We said to ourselves, if we’re going to move something to the clinic, let’s make sure it’s a winner,” Schatzman says. “Our goal is to be best-in-class.”
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