Early Company Evolution – People, Pipeline, and Purse

Posted September 16th, 2019 by Mark Manfredi, in Biotech startup advice, Corporate Culture, From The Trenches, Talent

This blog was written by Mark Manfredi, CEO of Kyn Therapeutics, as part of the From The Trenches feature of LifeSciVC.

“Time flies when you’re having fun.” That’s how I feel as I reflect on the first three years of the growth of Kyn Therapeutics. So much has happened since my R&D colleague Michelle Zhang and I moved into the seed space at Atlas Venture (see photo below of our cozy abode) to begin work on Kyn. As a first-time scientifically-trained biotech CEO, I assumed it would be similar to leading a project team in pharma – after all, the company started with only one asset!  Turns out it’s more complex, and there have been many twists and turns along the way.  While you can change focus from day-to-day, no area can be neglected, and don’t even think about choosing the wrong wine for a Board of Directors dinner.

A major component of our evolution at Kyn has been our transformation from a single asset company to an organization with three clinical and near clinical programs as well as a discovery pipeline. What were the triggers that have led us down this path? How did we decide to make this important move? What were the key elements that we believe have contributed to our successful growth? At Kyn we are still early in our company’s history, but I believe there are many relevant dynamics in our evolution to highlight. I share our story and thoughts below.

Once upon a time

At Kyn’s inception, IDO1 was all the rage.  With almost two decades of preclinical validation and initial positive clinical data with epacadostat (IDO1 inhibitor from Incyte) there was a lot of investment in the pathway (e.g., BMS/Flexus, Genentech/NewLink).  Our initial program was a biologics approach (engineered Kynureninase i.e. “Kynase”) that targeted both the IDO and TDO pathways and addressed a biologically relevant resistance mechanism of IDO1 selective inhibition (previous blog here).  The program was still at an early stage in lead optimization when we started Kyn.  Obviously the feeling around IDO1 selective inhibition has evolved since we started the company – more on that later.

Working on a single asset business model requires the dichotomy of belief that the project has the potential to change patients’ lives; with the understanding that generating key data has the potential to “kill” the opportunity.  The challenge is to stay internally motivated knowing this and strive to convince investors to fund the idea while at the same time recruit new talent to join your fledgling company when the next experiment could be the end of the original thesis.

Navigating internal hiccups or changes in the external environment for a small company with a single asset is an art when you have a small team, limited cash, and ambitious investors.

Building the team that can evolve with you

The team you build drives your competitive advantage.  There are many good people in biotech companies, but a highly functioning and effective team is more than just a collection of experienced people.  Early hires are critical as they are a major factor in attracting future employees – talent begets talent, as well as being able to adapt and grow along with the company.

We initially hired seasoned senior executive-level scientists who brought both self-sufficiency and a significant amount of leadership in their discipline.  The early senior hires helped shape projects and company strategy and build our consultant/CRO network.  We began building an internal research team after a year in order to iterate faster and control costs for some of our critical discovery work, including in vivo experiments. This internal research team has been instrumental in the scientific and pipeline advancements Kyn has achieved to date.  Since its inception, Kyn has delivered one program in Phase 1b/2, two additional assets proximal to the clinic, and a high- profile partnership with Celgene. And we did this with 14 full time team members continuing this semi-virtual model!

We supplemented our internal team with ex-large pharma consultants offering decades of valuable experience. We continue to choose those that not only provide a service but who are thought leaders in their discipline. Our consultants are an extension of our team and are empowered with decision making, invited to team building exercises, and are often onsite to mingle with the team. We make it a priority to keep them looped in at all times, not just when they are active on a project. This way, quick re-engagement when necessary is easy and seamless.

As Bruce Booth said in a 2012 blog post, “Make your board work for you.” This is a philosophy that’s served us well and has enabled our successful growth. Our board of directors comprises members with expertise in BD, financing, and R&D, and provide key connections with contacts within industry.  Our close working relationship with the board and their willingness to get their hands dirty with us in every aspect of building the company has fostered a high degree of trust.

From one program to a pipeline

The collaborative relationship with the board was especially helpful when we weighed the decision to build beyond one pipeline project. Our internal team saw several opportunities that we wanted to act on. Based on insights from the kynurenine pathway of our initial project, we became excited about the idea of targeting the aryl hydrocarbon receptor (AHR) with a small-molecule antagonist. That project would become our first homegrown discovery effort. We also saw an opportunity to in-license a clinical asset (EP4 antagonist). These strategic shifts were big undertakings and we needed to build our case thoughtfully and with a lot of conviction. To present our case to the board and investors on why we wanted to target AHR, we developed a clear picture of the development path, asked what the POC trial would look like and “what is the likelihood for a biomarker driven sub-population?” We knew that if we couldn’t answer the first question, then maybe the clinical hypothesis was too early, even if the biology was cool (lesson learned from Raze Therapeutics – here). This process helped us to learn who we are as a company. While some enterprises choose to go with big biology and a longer lead time to a drug candidate – that’s just not us. Our argument gained board approval and investors trusted our team and the plan that we laid out.

Discovering AHR antagonists

AHR agonists demonstrated strong and broad immunosuppression and there is clinical proof-of-concept with a synthetic agonist tapinarof in psoriasis.  Moreover, in cancer, many tumor types had high expression and activation of AHR.  This evidence was the basis for developing an AHR antagonist to stimulate the immune system in cancer.  We drove the project from initiation to development candidate in just 18 months and with approximately $6M in invested capital.  We leveraged the internal and external team to run fast working on the critical cell/in vivo pharmacology and chemistry.  Notably, we had an ace senior chemist doing compound design and leveraging a large medicinal chemistry team at a CRO and deeply experienced translational biologists to position the program for success in the clinic.  Early efficacy work was done in a KOL’s lab, which helped bring external validation with the bulk of the pharmacology and translational work done internally. We will be the first AHR antagonist to enter the clinic in oncology later this year and in indications we selected based on biomarkers demonstrating AHR activation.

Bringing in the EP4 program

Another strategic decision we made was to in-license a clinical asset (EP4 antagonist). EP4 is a receptor within the COX-2 pathway which has strong association with poor disease outcome in cancer.  While COX-2 inhibitors have yet to materialize as commercial therapeutics in oncology, clear clinical benefit has been seen in some patients.  The field had evolved from targeting COX-2 for tumor intrinsic biology to the belief that this pathway was playing an immunosuppressive role through the receptors, most notably EP4.  Also, there was a biomarker-driven approach with COX-2 expression and the metabolite PGE2 being associated with poor outcome in patients.  We were able to leverage the experience of our board and particularly one of our investors who identified the asset through his network and helped with contract negotiation given his deep BD background.  We assembled a clinical team quickly, leveraging consultants and internal clinical operations.  Within nine months from in-licensing we were dosing our first patient with our EP4 antagonist (ARY-007) in a Phase 1b/2 oncology trial focused on two indications in the checkpoint resistant setting.  This included making drug product, establishing a collaboration with Merck for Keytruda (free drug supply contract), and getting the clinical sites running.  This catapulted us to a clinical staged company, which has had benefits beyond the program.  We invested in clinical and translational capabilities and established KOL networks that have been leveraged for our earlier programs.  It has also made the organization more mindful of clinical questions in early programs.

Financing a long-term leading oncology company

Building a “forever” biotech company takes sustainable capital and timing is everything.  Unlike many larger companies, we are continually asking the question, “is this program financeable from an investor perspective?”  New programs, emerging data from existing programs, and, importantly, external data can influence your thesis and your value proposition, for better or worse, as we found out last year.

In the spring of 2018, the ECHO-301 IDO trial data was made public:  IDO1 inhibition added zero benefit to anti-PD1 treatment in melanoma.  Though we had both data and strategy that significantly differentiated our kynureninase and AHR programs from IDO1 selective inhibition, the epacadostat phase 3 data cast a shadow over the pathway being therapeutically relevant in cancer.  There is an existential question to be addressed when these events happen. The board met shortly after the readout and we all contributed to a healthy debate (no, really!). We could have shelved these programs but decided instead to stand by our science in this moment of industry doubt. And it paid off.

That summer, we began considering financing options with either a traditional series B or through a strategic partnership. Before embarking on an outreach campaign, we took the time to repackage our pitch to get ahead of the IDO story. Another piece of advice: scenario plan and optimize the message to the best of your ability.  While we had the EP4 project (months from the clinic), the headwinds we hit with the outside investment community as a result of the ECHO-301 trial were significant.  The industry as a whole was reeling from this study – not just for this pathway but for immuno-oncology in general.  Most VCs (outside of our current investors) liked our story but some were hesitant to get into the “tainted” IDO space.  They fell into two categories: those that heard we worked on the IDO pathway and decided immediately they were not interested; and others, more scientifically minded, who wanted to understand our differentiation.

On the partnering side, pharma had two decades of data supporting this pathway in oncology and believed in our package supporting our therapeutic differentiation from the IDO story.  While external influences created some bumps in the road, we entered into a global strategic collaboration with Celgene on the Kynureninase and AHR antagonist programs.  This brought in significant non-dilutive capital to fund these programs through phase 1b (with significant upside if successful) and the ability to further support our EP4 clinical asset and expand our pipeline with new discovery programs.  This was transformative for us.

At Kyn, we are just getting started. We are committed to building a leading translational-driven oncology biotech company.  I can’t say I know exactly where we will be five years from now, but I am confident that armed with a defined strategic plan, built on investments in the best intellectual capital and synergistic relationships, we will succeed in our endeavor to develop truly innovative cancer therapies while maintaining the open-mindedness and agility that has defined Kyn’s corporate philosophy since our inception.

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