Rottweiler tested, Novo and Sofinnova back $33M round for Rgenix

New York City

Sofinnova Partners’ Antoine Papiernek dispatches some special consultants he affectionately refers to as his Rottweilers to do some of the final due diligence on the biotechs he’s seriously considering investing in. If the companies can’t pass this final inspection, the Paris-based fund doesn’t invest.

But when they came back from New York-based Rgenix, tails wagging, Papiernek not only agreed to co-lead the $33 million B round, he grabbed a seat on the board along with Nilesh Kumar from co-lead investor Novo A/S. Existing investors including the Partnership Fund for New York City, Alexandria Venture Investments, and Conegliano Ventures LP--which made the introduction to Papiernek--also stepped in.

Much of their money will be devoted to moving the lead cancer drug at Rgenix--RGX-104--into the clinic later in the year. 

“This compound had very, very strong single agent activity,” says Papiernek. “And it didn't appear overnight. This is something they've been working on for 3-4-5 years.”

What the small Rgenix team has been doing over the past 6 years since the company was founded has a lot to do with microRNA--gene expression regulators.

“We can start with any cancer type, looking at those that are drug resistant (with no driver mutation), and identify microRNA pathways,” says Masoud Tavazoi, company co-founder and CEO. “They converge on single genes that are key regulators of cancer progression.”

They were surprised to find that APOE, a target well known in cardiovascular and Alzheimer’s research, also played an immunotherapeutic role in the tumor microenvironment. Their lead drug targets LXR, which in turn amps up APOE, facilitating an immune response. If that works, it’s an ideal candidate to pair up with a checkpoint inhibitor.

The next step was getting an APOE drug, and the startup wound up in-licensing one that had been tried by GlaxoSmithKline for cardio and discarded after it raised triglycerides in preclinical studies. (There are no numbers offered on the deal, but GSK is well known for letting its unwanted assets go at firesale prices.) That’s an adverse event that won’t fly for chronic treatment of mass heart disease. But when you narrow it down to drug-resistant cases of cancer, the risk/benefit profile tips much more to the benefit side of the equation, especially if you can use a statin to control the side effect in most patients.

Now that the B round has landed, Rgenix will soon start a Phase I study for the lead, looking to make the big leap from preclinical animal studies into humans. They expect to have data in a year, which will tell them if they have something that could be pivoted into a pivotal trial. And they will also do more early work on the rest of the small but growing pipeline.

Another drug in the preclinical pipeline is RGX-202, which switches focus to cancer metabolism. Two antibodies, RGX-014/019, are aimed at tumor metastasis, with an early aim on triple negative breast cancer.

There are several aspects about this deal that are unusual. Masoud Tavazoie is working with his brother, Sohail Tavazoie, and his team at Rockefeller University, which did the preclinical work on the lead drug. Another brother, Columbia Professor Saeed Tavazoie, is the third co-founder.

Rgenix also offers the profile of the type of biotech that the New York branch of the biotech business would like to see replicated. The company’s success would help spotlight the potential for more such startups in Manhattan, which may be a pricey environment but also has some of the best research institutions on the planet to seed new ideas.

What New York doesn’t have is a big local community of VCs, which may explain why the company had to reach out to two European VCs to lead the way on the latest round.

“We don’t see this as a one-trick pony,” says Masoud Tavazoie. And that’s helped stir some inbound interest from pharma as the brothers and a strategic advisory board that includes UCLA’s Toni Ribas and high profile biotech entrepreneur Rich Heyman, of Seragon/Aragon fame.

"I was pleased to see that Rgenix completed their financing as they have made very good progress over the past few years and the data that they have generated offers some interesting opportunities in the cancer treatment paradigm," Heyman messaged me. "LXR plays a critical role in many signaling pathways and their research has driven them to push their lead compound forward."