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Eying Clinical Trials, Shattuck Labs Adds $46M for Immunotherapy R&D

Xconomy Texas — 

Austin — [Updated 5/30/18, 11:08 a.m. See below.] Shattuck Labs, a biotech that licensed technology from cancer drug developer Heat Biologics, added a cash windfall right before the holiday weekend—a $46.6 million equity round of financing, according to a May 25 securities filing.

Austin-based Shattuck has an experimental immunotherapy in preclinical development that it believes can fulfill two lofty goals that are currently among the hottest areas of oncology. Its so-called “fusion proteins” aim to combine two approaches to cancer treatment in a single therapy. Its drug would work as a checkpoint inhibitor, blocking molecules that put a brake on the immune system. The drug would also stimulate certain receptors (the tumor necrosis factor superfamily of proteins) on T cells, the immune system’s cancer-killing cells.

The company hasn’t yet revealed many more details about how it will do so. The company has said, however, that besides cancer, its technology has potential applications in inflammatory disease. [Wording changed in first paragraph to remove the description of Shattuck as a spinout. The company believes the word might imply it was previously a subsidiary or a unit within Heat, which could create confusion. Shattuck licensed technology and rented lab space from Heat.]

Shattuck calls its program the Agonist Redirected Checkpoint platform, and it licensed the initial provisional patent applications and “know-how” in June 2016 related to fusion proteins to treat cancer and other diseases from Durham, NC-based Heat (NASDAQ: HTBX), another immunotherapy drug developer, according to a securities filing. Shattuck rented lab space from Heat through early January 2017, and now has R&D facilities in Research Triangle Park, NC, in addition to its Austin headquarters. [Additional words added, paraphrased from Heat Biologics securities filing.]

Last August, Shattuck announced it signed a deal to collaborate with Takeda Pharmaceutical and its cancer subsidiary, Millennium Pharmaceuticals. Takeda is providing funding for preclinical and clinical development of two pre-clinical and four discovery-stage drug candidates, and in exchange gained the option to license up to four of the molecules, according to a news release. Other terms weren’t disclosed.

Josiah Hornblower, Shattuck’s chairman and CEO, said the company has been quiet by design. Shattuck is considering whether to provide further comment. Notably, Hornblower is the former CEO of another Texas biotech company: Pelican Therapeutics, another immuno-oncology drug developer founded by Heat in 2009.

Pelican spun out as a separate company in 2011 because Heat didn’t have the funding to develop Pelican’s two drug candidates, Heat founder and CEO Jeffrey Wolf told Xconomy last year. Heat decided to re-acquire Pelican in March of 2017. Rahul Jasuja, a former board member, took over as CEO of Pelican in April, and a month later, Pelican received a $15.2 million grant from the Cancer Prevention and Research Institute of Texas (known as CPRIT in the state) to perform preclinical work on its monoclonal antibody and its protein that aim to stimulate or proliferate the response of T cells.

Pelican moved its headquarters from Austin to San Antonio last September in part because of a $200,000 grant from the city’s government. The City of San Antonio has offered similar grants to other companies, including another immunotherapy business, Houston-based Kiromic, most recently.

Hornblower is known for more than his work in biotech. He was in “Born Rich,” a 2003 documentary by Johnson & Johnson (NYSE: JNJ) heir Jamie Johnson about descendants of the country’s wealthiest individuals. Besides Hornblower—a descendant of Whitneys and Vanderbilts, according to Town & Country magazine—the film also interviewed Ivanka Trump, Georgina Bloomberg, and numerous other heirs to fortunes.

Shattuck last raised a $7 million debt round of financing in March 2017. Hornblower told the Austin Business Journal in April of that year that $5 million came from an international pharmaceutical company, declining to name specific investors. Shattuck announced the deal with Takeda four months later. Shattuck’s website currently states that it expects to start clinical trials by early 2019. If the company plans to develop therapies that are not covered by its Takeda collaboration—the phrasing of a news release indicates the Takeda deal may only cover oncology, not necessarily inflammation—the latest equity investment provides the company the cash to do so.

Immunotherapy is a highly competitive field. Checkpoint inhibitors from Merck (NYSE: MRK), Bristol-Myers Squibb (NYSE: BMS), Roche/Genentech and others have won approvals in cancers of the skin, lung, kidney, and more, but they don’t work for all patients, leading pharmaceutical companies to look for drug combinations that could broaden their use and help the non-responders respond, as Xconomy’s Frank Vinluan wrote earlier this month. Eli Lily (NYSE: LLY) plans to add engineered cytokines—substances secreted by immune cells during an immune response—to the mix of combination therapies through a deal announced earlier this month to acquire Redwood City, CA-based Armo BioSciences (NASDAQ: ARMO) for $1.6 billion.

Shattuck says on its website that its technology could “build directly on the clinical success” of immunotherapies now marketed by Merck, Bristol-Myers Squibb (NYSE: BMS), and Roche. The Texas company adds that its technology could apply to multiple tumor types and it expects to start clinical testing early next year.