Hotspot Therapeutics Turns Up The Heat On Natural Allostery

Posted July 17th, 2018 in Biotech investment themes, Portfolio news, Science & Medicine | Leave a comment

Most conventional small molecule drugs engage directly with the engine of a protein’s function, aiming to often turning off an enzymatic activity associated with a disease. These drugs bind and compete against the natural substrate of the protein at what are known as orthosteric sites. But other pockets on a protein can also modulate function, and these sites commonly referred to as allosteric sites.

Nature commonly uses specific allosteric sites, distal to their active engines, to regulate the functional activity of proteins. Because of this potential powerful role, allostery has fascinated the pharmaceutical industry for decades as an approach that could open up otherwise challenging drug targets.

To date, the industry has made reasonable traction at making allosteric modulators for ion channels and transmembrane proteins on the surface of cells. Positive allosteric modulators (PAMs) and negative allosteric modulators (NAMs) are being exploited to regulate the activity of many cell types, but especially neurons, including the well-known benzodiazepine class of drugs.  A broad range of PAMs and NAMs are being explored in clinical development today, including NMDA and SK2 channel programs.

This flavor of allostery has typically been uncovered via phenotypic cell-based screens looking for a downstream cellular effect; in many ways, these allosteric-site engagers are found by experimental “accident” with their binding sites only deconvoluted after the fact. These phenotypic screening methods to find allosteric modulators extends beyond just ion channels; agonists of enzyme activity in lysates and in cells can be uncovered in this HTS-enabled fashion, as occurred with our glucosylcerebrosidase (GCase) activator program at Lysosomal Therapeutics, now in Phase 1 for Parkinson’s Disease.

In light of the role of phenotypic screening in most cases, it’s no surprise then that most of the existing small molecule allosteric drugs were not created as a priori allosteric regulators of a protein, nor were they computationally-powered, protein structure-enabled programs (SBDD).

That said, there are a number of recent and notable examples of allosteric inhibitors discovered with significant input from SBDD, like Bcr-abl, Akt, HIF-2a, and SHP2 (here). At Nimbus, we also exploited this allosteric discovery strategy with both our acetyl CoA-carboxylase (ACC) and Tyk2 inhibition programs.

With ACC, Nimbus chose to go after an allosteric site on a regulatory domain of the enzyme, rather than the catalytic site where most of the industry had broken their pickaxe. Using SBDD, and enabled by a natural product that blocked the site, Nimbus discovered a potent inhibitor with attractive drug-like properties. After exciting early clinical data, Gilead acquired the program and is advancing it in NASH (here).

Building on these successes, Hotspot Therapeutics was founded to systematically approach the allosteric modulation of intracellular proteins by building a platform to exploit nature’s protein regulatory mechanisms. Today we are officially launching HotSpot out of seed-stage stealth mode with the closing of $45M Series A round of financing (http link).

Beginnings: It Starts With the Team

Hotspot was founded by CEO Jonathan Montagu and CSO Gerry Harriman. These two seasoned executives are very well known to Atlas, as they were two of our initial hires when I was acting CEO of Nimbus in 2010.  Jonathan was the first CBO of Nimbus and Gerry led the successful discovery and early development of the ACC program. I had the pleasure of working with both of them very closely for a 4-6 years, and they left Nimbus in 2014 and 2016, respectively.

(Jon Chomitz Photography)

Jonathan Montagu and Gerry Harriman

The two of them began to noodle on the initial concept for HotSpot in late 2016, and we committed to seed the effort in December 2016, largely on the basis of two great serial entrepreneurs (who became Atlas EIRs) and a compelling concept paper. Other than our collective experience with SBDD-driven allostery, HotSpot had no specific lead matter around new targets or any new “rules” for allostery discovery at inception. It was a bet on a founding team with a great idea.

Gerry and Jonathan had a clear vision of what they wanted to build: a structurally-enabled product engine platform to a priori identify targets regulated by natural allostery and to discover novel drugs that exploit those mechanisms.

Shortly after seeding the startup in March 2017 with our friends at Sofinnova Partners (whom we had just worked closely with at Delinia), HotSpot assembled its core scientific team: Oscar Moradei drives medicinal chemistry (ex-Epizyme, Merck); Ara Aslanian heads up our in vitro pharmacology efforts (ex-Concert, Novartis); Peter Fekkes brings strong biophysical expertise as he leads the new targets effort (ex-H3, Novartis); Suresh Singh (ex-Vitae, Merck) has led our computational chemistry work; and, most recently, Christian Fritz joined to lead molecular pharmacology and translational biology (ex-Syros, Infinity).

With this solid team as a foundational element of our HotSpot investment thesis, what’s the nature of the opportunity?

Hotspots: privileged, natural allosteric regulatory sites

Drug discovery programs aimed at a protein’s catalytic or orthosteric site often face an uphill challenge in their quest for potent, selective, drug-like molecules. First, the inhibitor has to compete against natural substrate, which can reach very high concentrations inside of cells (e.g., ATP is mM in the cytosol); this creates high potency and target occupancy hurdles. Second, nature has largely conserved the catalytic engines that effect similar processes inside of cells (e.g., phosphorylating proteins via kinases), creating selectivity challenges that manifest as “off-target” concerns. Lastly, many substrates are charged or greasy (hydrophobic) which affects the character of these binding sites, biasing lead discovery towards chemistries with “un-drug-like” properties, challenging prospects for oral bioavailability and adequate pharmacokinetics.

Allosteric sites, in contrast, get around these liabilities by exploiting more natural regulatory contexts. Nature has evolved precise mechanisms for controlling protein function, often taking advantage of post-translational modifications (or PTMs, like phosphorylation, acetylation, methylation, etc). For example, many proteins are known to have large unstructured domains, far from their active sites, that get phosphorylated, inducing changes to protein structure through intramolecular phospho-regulatory binding sites. The same tertiary structure changes can happen with acetylation and other modifications.

The natural pockets where these PTMs fold or bind in unique ways create allosteric sites that are deemed regulatory “hotspots” – hence the name of the startup.

Drugging hotspots has some advantages over catalytic pockets. These sites don’t compete with abundant natural substrate. Because nature needs sensitive on/off mechanisms, these are typically very low affinity interactions. Further, they are often formed by unique protein sequences, which help solve the selectivity problem of conserved catalytic machinery.  These sites also frequently have a more balanced drug-friendly character when it comes to their charge, hydrophobicity, and size. Lastly, many protein targets that are undruggable by conventional inhibitors can be targeted via these regulatory hotspots. All of this makes hotspot drug discovery incredibly compelling.

In addition, these hotspots are often superior to conventional forms of allostery: they are amendable to systematic SBDD approaches rather than phenotypic screens; they by definition have functional relevance vs other “cryptic” or random “computationally identified” protein pockets; and, the natural PTM ligand itself provides a starting point for a structural understanding of the site and initial chemical equity.

As for the scale of the opportunity, literally hundreds, if not thousands, of targets in the human proteome are amendable to hotspot-directed drug discovery.  Our team has already characterized over 130 proteins with druggable allosteric sites.

HotSpot’s Platform And Product Engine. 

At the heart of HotSpot’s discovery engine is its SpotFinderTM platform, a series of complementary technologies that enables pan-proteome mining of putative hotspots:

  • site-mapping and virtual chemical probe techniques that prioritize potential hotspots that are predicted to bind chemical modifications (such as phosphate) and most amenable to small molecule drug discovery
  • meta-level functional data relevant to regulatory hotspots from target and gene databases, thereby creating picture of the pharmacology one anticipates through small molecules
  • natural language processing tools which scan scientific literature to identify proteins with potential regulatory hotspots where structure-function is understood in the scientific literature

Once SpotFinderTM has identified and characterized a high potential site/protein target, Hotspot’s discovery platform combines both virtual and physical library screening to identify hits. Based on insights into hotspot binding site configurations, a novel chemical library has been created comprising privileged scaffolds/chemotypes that are not typically found in conventional screening decks. To drive specific binding modes, Hotspot applies extensive protein engineering approaches that lock the target’s hotspot in the various conformations, including those likely to enlist the optimal type of pharmacology when bound.  All of this is underpinned by state of the art computation drug design and lead optimization techniques.

HotSpot executes against this platform in a globally-distributed, virtually-integrated fashion, much like our experience at Nimbus and elsewhere. Truly proprietary elements remain purely in-house, including SpotFinderTM, chemical library design, computational approaches like virtual screening; outsourced components are physical medicinal chemistry, assay execution, crystallography, biophysics – all performed by top tier partners around the world. HotSpot is also at the vanguard of applying technology-enabled agile startup concepts to biotech, especially with Slack as their workhorse day-to-day productivity and conferencing platform (here).

HotSpot’s Pipeline & Future Plans

As with all new drug discovery engines, target selection is a critically important driver of eventual success (or failure). HotSpot spent much of its first year mining different target classes and specific proteins in order to characterize and prioritize what ones to go after. We continue to turn the crank of the machine to identify new hotspot-possessing targets to feed the drug discovery process, and will ramp efforts to widen our pipeline over time.

To date, we’ve only disclosed two of our active programs: PKC-theta for autoimmune disease and S6K for metabolism, broadly defined. Both of these hotspot inhibitor programs appear to offer unique and differentiated pharmacology versus traditional active site inhibitors, and we’re excited by their progress.

  • PKC-theta is an immunokinase target offering potential to simultaneously stimulate regulatory T-cells (T-regs) while dampening effector T-cell function. Past industry attempts to drug the active ATP-binding site of PKC-theta had typically failed due to off-target effects and generally problematic chemotypes. We’ve uncovered a phosphoregulatory hotspot, previously unexploited by industry, and now have the first and only allosteric inhibitors of this kinase. These demonstrate all of the predicted attractive features (potency, selectivity, robust pharmacology), and the program is advancing into lead optimization.
  • S6K is a metabolic enzyme that plays pivotal role in a cell’s sensitivity to insulin signaling and changes in energy metabolism. Work by Novartis showed that knocking out S6K1 in mice restores insulin sensitivity in mice on a high-fat diet, while increasing the number/size of mitochondria. These mice were jokingly called ‘flash’ mice due to their ability to run seemingly forever. Further, S6K appears to control the metabolic energetics of cell fate, such as regulating Th17 differentiation. Because of this role, inhibiting S6K offers important applications in a range of metabolic diseases e.g. NASH, diabetes, obesity, etc…  However, the ATP/active site has never delivered selective, potent molecules with the right biodistribution properties. Using our SpotFinderTM platform, we have found a regulatory hotspot on S6 and already identified the first and only allosteric inhibitors, with highly differentiated properties (including selectivity) versus traditional active-site binders.

The rapid progress of these two programs in less than 12-months, as well as further undisclosed target activity, gives us solid confidence that hotspot-directed drug discovery will be a rich vein to mine for unique pharmacology – and this triggered our keen interest in powering up the story with a significant Series A financing.

As is often the case, a critical input to scaling this platform will be further access to both capital and expertise over time.  To that end, we’re open to early discovery stage collaborations with partners where there’s a good fit and desire to unravel nature’s regulatory code on specific programs, as well as to long-term patient capital looking to help scale a big story.

Allosteric R&D is one of the most exciting areas of drug discovery today – but HotSpot is already turning up the heat even more.

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A Hat Trick Of Cell And Gene Therapy IPOs: Avro, Magenta, and Unum

Posted June 28th, 2018 in Biotech investment themes, Exits IPOs M&As, Portfolio news | Leave a comment

Last week, AvroBio and Magenta Therapeutics priced their IPOs on the same night. Less than three months earlier, Unum Therapeutics priced its IPO.

All three biotech companies are emerging leaders in the cell and gene therapy space, broadly defined. They are now well financed for the next chapter in their respective journeys to bring new potentially transformative therapies to cancer, rare disease, and autoimmune patients.

All three are also companies that I’ve had the good fortune and privilege of playing a small part in shaping, serving as chairman of both Unum and AvroBio and being a founding investor/director of Magenta. Participating in three IPOs in less than three months has been a fun and eye-opening experience, so I thought it might be worth sharing a few reflections on these stories, the broader IPO market, and cell and gene therapy.

For context, here’s a quick background of each.

  • Unum ($UMRX) is a cellular immunotherapy platform leveraging its antibody-coupled T cell receptor (ACTR) technology in combination with tumor-targeting antibodies to activate the body’s own immune system to fight cancer; Unum has three active clinical programs in lymphoma and myeloma (for a past blog, see here).
  • AvroBio ($AVRO) is focused on developing potentially curative ex vivolentiviral-based gene therapies to treat rare diseases following a single dose, with a lead program in Phase 2 for Fabry Disease, and several preclinical programs addressing other lysosomal storage diseases (see here, here)
  • Magenta ($MGTA) is developing therapeutics focused on critical areas of unmet need in the field of hematopoietic stem cell bone marrow transplant for patients with autoimmune diseases, blood cancers and genetic diseases, with programs focusing on conditioning, mobilization, and expansion, including an active Phase 2 program (see here, here).

These are three of over 30 biotech IPOs so far in 2018, which is tracking to be a top quartile year for IPO volume and value since the beginning of the industry. As predicted back in January, the first half of 2018 has been incredibly busy as the backlog of well-funded companies transition to the public markets.  June is tracking to be the busiest month of all time, with potentially 15 priced IPOs, topping July 2014’s 11 offerings.  And last Wednesday, June 20th, saw five IPOs get priced – a record – beating out February 2, 2014’s four IPOs. I must admit it was rather surreal to be tracking two simultaneous roadshows and then being on two IPO pricing calls on the same night.

Beyond these three, a number of other great companies have accessed the public markets, with a wide range in post-offering performance (as covered by Damian Garde at Stat News and John Carroll at Endpoints). There’s also a pipeline of at least 6 companies with pending offerings over the coming month or so.

Atlas has also been fortunate to see several other portfolio companies IPO in the first half of 2018: immuno-oncology player Surface Oncology went public in April, and mRNA-focused Translate Bio priced its IPO last night.

There are at least five general drivers for this wave of new issuances in biotech, across all therapeutic subsectors: first, the pace of innovation and the delivery of value to patients continues to accelerate (e.g., positive new data over past year in SMA, DMD, NSCLC, AML, myeloma, DLBCL, etc); second, significant private funding has poured into later stage private companies (in fact, the most private funding in the 40-year history of biotech) helping them scale faster and preparing them for nearer-term entry into the public markets; third, keen appetite for higher growth biotech stocks from public investors, weary of a dearth of growth stories in larger cap biotech and other sectors; fourth, the recycling of capital from M&A into “new” biotech stories; and, fifth, an expectation of continued M&A as Pharma secures more of their pipelines externally.

The enthusiasm for cell and gene therapy (CGRx) plays, of which Avro, Magenta, and Unum represent, reflect those general biotech tailwinds, but is magnified by the large therapeutic effect sizes seen with these CGRx therapies. Durable CRs and potential one-and-done cures seem within reach of these therapies. And these effects often reveal themselves with very small numbers of  patients, making early clinical value inflections possible. Further, the CGRx field has reached a tipping point: like other overnight successes 30 years in the making (with early CART and gene therapy concepts articulated in the late 1980s), things have begun to truly click in the past 5-10 years. Advances in viral vectors, construct engineering, cell processing, and transplantation have all converged to create momentum in the sector and enable impressive clinical data: CD19 and BCMA CARTs in cancer, AveXis’ in SMA, Sarepta’s recent data in DMD, Spark’s in rare blindness, BMT in multiple sclerosis, CALD lenti data from bluebird, etc… These therapies are presenting early data with real curative potential – which was unheard for these diseases before CGRx.

Much of this CGRx enthusiasm is captured in an October 2017 blog post, Living Medicines With Curative Intent, and underpins the positive investor interest in the space.  As of today, bluebird and Sarepta have $9B+ valuations, Spark is above $3B, and Audentes is above $1.5B – as a few examples. Furthermore, recent M&A in the field has added fuel to the fire in CGRx more broadly – including cancer immunotherapy, gene therapy, and cell therapies: AveXis’ recent acquisition by Novartis for $9B and both Kite and Juno’s $10B+ acquisitions by Gilead and Celgene, respectively. A number of other cell and/or gene therapies have priced their IPOs in 2018, including Autolus, Homology, Solid, and MeiraGTx, to name a few.

It’s against this market backdrop that Avro, Magenta, and Unum entered the public markets; across all three, they’ve now raised a combined ~$300M from their IPOs to continue advancing their clinical pipelines and powering up their product discovery platforms.

Beyond being three of my portfolio companies, their near simultaneous IPO debuts, and them all working hard to bring the next generation of cell and gene therapies to patients, these three share a number of other similarities with regard to their origins:

  • Founded on cutting-edge academic science. Unum’s foundational ACTR technology came from Dario Campana at Duke/NUS in Singapore; Avro’s lead Fabry program originated from the University Hospital Network in Toronto; and, Magenta’s principal scientific founder is David Scadden at Harvard. During their formative moments, all three partnered with these key academics, as well as others, to help catalyze their creation. Unum’s and Avro’s lead programs were essentially peri-IND/CTA at the time of their initial financings due to the work of their founding academic partners.
  • These three began life embedded in healthy startup “communities”. All three of these started around Technology Square in Cambridge. Magenta and Avro both incubated at Atlas (in offices next door to each other) as part of our venture creation process for much of their formative period, while Unum incubated at LabCentral right down the street. The Cambridge/Boston startup community played a key role in establishing a nurturing ecosystem for venture formation and early traction.
  • All three trajectories from founding to IPO have been incredibly fast by historic metrics. Unum went from its initial financing to IPO in 3.5 years; Avro and Magenta were closer to 2.5 years. All three of these, therefore, had very short tenures as private companies relative to biotech history; for comparison, the average time to IPO in biotech only a few years ago was over 7 years (here). Accessing the public markets early will help them scale their programs and platforms.
  • Initial positive clinical data helped drive investor interest. These were not preclinical concept stories; all three have initial clinical data prominently described in their S-1’s, which is part of the reason for their fast trajectory described above. While not a requirement for an IPO today, clinical data is often a catalyst for broader interest by public market investors.
  • Early business development deal-making was important for accessing key programs. Unum struck an early partnership with Seattle Genetics to secure access to two tumor-targeting antibodies, including one for BCMA; Avro sourced several additional ex vivo lenti programs for lysosomal storage diseases from academic groups around the world (here, here, here), as well as from BioMarin; and Magenta partnered with Novartis to secure a clinical-stage stem cell expansion asset (co-discovered by Magenta’s CSO), as well as with Heidelberg Pharma around ADC technology. These were BD deals designed to augment their pipelines/platforms in a strategic, not serendipitous, manner.

The CEOs of these three companies are exceptional, and it’s been a real pleasure to work with them. A few other similarities exist across them:

  • All three CEOs are co-founders of their companies: it’s not super common to have the biotech founder-CEO fit the CEO role’s needs from inception into the public markets, but these three are great leaders and have focused on building high impact corporate cultures.
  • They are all first-time public CEOs (and two, Chuck and Jason, are first-time CEOs entirely); while new to the role and context, they have deep executive experiences to draw on, and solid management teams working with them.
  • All three CEOs are foreign-born entrepreneurs, which is a common background in our industry and Atlas’ portfolio (as discussed previously). Biotech is a global business, and Cambridge/Boston is a talent aggregator from around the world.

Beyond the CEOs, there are strong, experienced management teams at all three companies with deep expertise in cell and gene therapy, as well as oncology, autoimmunity, and rare disease.  Further, it’s a diverse group, and female executives play critical roles on these management teams: Unum’s president/CFO Christiana Stamoulis; Avro’s CMO Nerissa Kreher, CFO Katina Dorton, CBO Deanna Peterson, and co-founder/head of operations Kim Warren; and Magenta’s CBO Christina Isacson and VP of Investor Relations Manisha Pai, to name a few. Attracting, retaining, and cultivating diverse talent is a critical growth issue for all companies, and these three are focused on it.

To close, it’s worth emphasizing that IPOs are only a step along the journey.  It’s a watershed moment for an emerging biotech, as it opens up new opportunities for financing the growth of the company over time.  And IPOs set up eventual liquidity for earlier stage shareholders as the investor mix evolves over time.  Importantly, though, IPOs are not exits – no one is selling their stock – but instead these debuts help unlock value over the long term.

We’re honored to work with these great teams, and pleased to have a great group of new public investors join us in these stories.  We’re also excited to watch where these and other IPOs in the Class of 2018 go over the coming years. Onward and upward.

 

 

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