Emerging Drug Developer: Biolex Therapeutics

Investment funds still flow in Biolex's direction

This was supposed to be the year that Biolex Therapeutics went public, using funds from an IPO to advance a therapy that makes a solid, straightforward business case.

But 2008 is not that kind of year for emerging drug developers.

IPOs of every stripe are all but dead, regardless of the business case that is being made. And the Pittsboro, NC-based biotech found itself back in talks with a group of venture capitalists - many of whom had already helped the company raise its first $100 million.

When they were finished talking, Biolex had secured an additional $60 million in a Series D that should take the developer's lead therapy right to the doorstep of a late-stage trial. And at that point, Biolex plans to ink a partnership deal that will enable the company to advance to its next phase of development.

For now, most of its eggs are in mid-stage baskets that hold Locteron, an interferon alfa for hepatitis C. Unlike the current therapies on the market, Locteron is a controlled-release drug, and the company's researchers have been building a case that their approach offers a better safety profile and an easier dosing regimen for patients.  

"We are very excited about Locteron's profile," Biolex CEO Jan Turek tells FierceBiotech. "A Phase IIa has demonstrated equal efficacy, a favorable side effect profile and dosing convenience. A Phase II has been completed in the U.S. but not reported yet. And a Phase IIb "will allow us to select the dose we take into the clinic."

A late-stage trial could get started in late 2010. But Biolex clearly plans to have a major partner lined up by that stage.

"Our expectation is that prior to Phase III we'll have a partnership with a major company," says Turek.

And they'll be in a position to strike a better deal than they would have even last month. Along with the new financing, Biolex engineered a new deal with OctoPlus, which had made its controlled-release technology available to the company. Biolex paid OctoPlus $11 million up front and committed to a schedule of milestones in order to buy back full rights to Locteron. And that means Biolex will take more of the rewards offered by a new partnership deal.

Biolex has two other drugs in pre-clinical development: BLX-155 for blood clots and BLX-301 for non-Hodgkin's B-cell lymphoma. But for now, the development focus is centered squarely on Locteron -- "our number one value driver," says Turek.

The News & Observer notes that Biolex has cut its staff from 106 to 90, but you get few details on who got cut or why.

Dale Sander, the CFO, says simply that the company is "appropriately staffed."

The recent venture round brings Biolex's total venture take to $165 million. Clarus Ventures led the round, with OrbiMed Advisors jumping on board as a new investor. They were joined by a big group of venture outfits that included Intersouth Partners, Quaker BioVentures, Johnson & Johnson Development, Polaris Ventures and the North Carolina Economic Development Fund.

The financial crisis has yet to freeze investment activity, says Turek.

"A lot of venture money was raised in the last 18 months by the venture funds themselves," says Turek. And that money continues to flow to companies like Biolex.