New venture funds point Argos to a development crossroads

Last week, Argos Therapeutics took a $35 million step toward its goal of generating proof-of-concept data. And after its first new venture round in six years, the developer was also able to see its next act start to come more clearly into focus.

For this biotech, it’s beginning to look like a merger or public offering could be in its not-too-distant future.

“I don’t think going forward it’s going to be possible, because of the size of the trials we’d need to do, to fund this via private equity,” says Argos CEO John Bonfiglio, PhD. “We’ve talked with some investment bankers -- if we meet our milestones and get excellent data -- to see what the potential is. The general feeling is that there is potential, depending on what the market is going to be like at that point in time, for an IPO, or merger/acquisition. The data will drive it.”

Argos has now raised more than $80 million from investors and has an ongoing collaboration with Kirin Pharmaceuticals that covers half of its research costs. With the new money in the bank, Bonfiglio says he now has enough cash to fund the company’s work through 2009 and proof-of-concept data. 

Argos’ Arcelis technology is concentrated on finding new therapies for cancer and infectious diseases. The technology takes dendritic cells from a patient, loads it with messenger RNA from the patient’s disease, and releases it back into the system as a highly targeted and personalized immunotherapy. Their work fits in with a range of new research programs that train the human immune system to recognize and attack a disease. A separate program for its CD83 soluble protein is also in early-stage development for autoimmune disorders.

The developer currently has a mid-stage trial underway in renal cell carcinoma. There’s a trial as a standalone therapy after tumor removal surgery and another trial of the therapy in combination with Sutent.

“Sutent doesn’t cause complete regression,” says Bonfiglio. “It buys time, knocking down the tumor load. We’re hoping for regression.

Argos Therapeutics, which was formerly named Merix Bioscience, has a separate program in development for chronic lymphocytic leukemia.

“Phase II will run into 2009, middle to late 2009,” he adds, with interim data scheduled for the first quarter of next year. “We also have a contract with the NIH to develop next-generation HIV immune-based therapies.

“We take a 2.5 milliliter sample of plasma that’s infected, take that back to the facility, extract RNA from the virus and we amplify it,” explains Bonfiglio, “mature dendritic cells and put the RNA back into the dendritic cells and make an immunotherapy product from that.

“The holy grail is not immune response,” says Bonfiglio, “it’s controlling viral load. I think the major thing with an immunotherapy is that patients don’t have to take it every day. The side effect profile is a lot better than what you’re seeing now. I think if we can control the viral load by giving an injection once a quarter, patients will be a lot happier.”

The NIH provided a $21 million contract for the HIV program, one reason why Argos has been able to go almost seven years since its Series B. Its partnership with Japan’s Kirin Pharmaceuticals has also been crucial. Kirin funds half of the development costs.

“Kirin just merged with Kyowa Hakko, which doubled its size,” says Bonfiglio about his development partner. “We’re waiting for the dust to settle on the merger. I believe they have a lot more bandwidth now, and can take on a lot more.”

Kirin also joined the latest round backing Argos’ next stage of development. TVM Capital led the new funding. New investors include Mizuho Capital, Morningside Group and Japan Asia Investment with Lumira Capital, Forbion Capital Partners, CDP Capital, Intersouth Partners, Aurora Capital, and GeneChem participating.