Same plan, familiar lineup of candidates, slightly new name

There are very few biotechs that get to launch with a game plan that’s not only fully fleshed out but also a proven success. But that’s exactly what Relypsa can rely on as it picks up where Ilypsa left off after it was acquired by Amgen last summer for $420 million.

Amgen’s primary interest in Ilypsa was centered on its lead program – the mid-stage ILY101, a product of the company’s focus on developing nonabsorbed polymeric drugs for renal and cardiovascular diseases. So a core group of Ilypsa’s executive team regrouped around the four remaining preclinical programs, the same discovery platform, Ilypsa’s team of employees and spun out a very familiar business with a slightly modified name. And they did it with $33 million in new venture backing.

“Over the last several years we’ve worked together very efficiently,” says CEO Jay Shepard, “and we have chosen to work together again, with all the lessons we’ve learned, the platform and expertise going into a fully functioning company.”

In loose translation, that means full speed ahead.

Relypsa plans to move its lead program into the clinic in the first quarter of 2008, with a second therapeutic following a year later and then one new candidate each year afterward. The company’s new lead program is a potassium binder drug candidate for the treatment of hyperkalemia, ILY105, followed by a sodium binder, ILY102, for congestive heart failure.

With the clock ticking on the company’s burn rate, Santa Clara, CA-based Relypsa plans to get Phase I data in mid-2008, with a Phase II underway later the same year.

“We hope to be able to get the initial patient data in the second half of ’09,” says COO Gerrit Klaerner, PhD.

Polymeric drugs are developed so that they work inside the gastrointestinal tract, clearing the body through the digestive system – before it hits the blood stream. The non-absorbed features give the therapies an improved safety profile. And done properly, Relypsa can develop these therapies on a faster timeline and look for approvals sooner than most drug developers might.

What makes Relypsa different from other companies focused on polymeric drug development? “Our technology platform,” says Shepard, “a high-throughput screening platform for therapeutic drugs. That means we can look at, in months, thousands of different ways of creating polymers that will bind with moieties (a segment of a molecule) in ways that are selective and might minimize potential GI problems. I like to say that we can make these drugs do what you want them to do and avoid what you don’t want them to do.”

Relypsa fueled up at the end of October with a $33 million venture round led by 5AM Ventures and New Leaf Venture Partners with Sprout Group, Delphi Ventures, CMEA Ventures and Mediphase Venture Partners joining in. Amgen is also an investor in the company.

“We’ll probably borrow a few pages from Ilypsa’s play book,” says Shepard, with some deals structured for markets outside the U.S. That may well mean another deal with a Japanese company patterned on Ilypsa’s $92 million pact – with $22 million of that up front -- with Astellas.

They’ll be operating with a staff of about 40 people, which should stay stable through next year. “We’re not going to double in size in 12 months,” says Klaerner. “We don’t have to fill a lot of empty slots to fill. We may be in the mid-40s in a year.”

But beyond that, Shepard and Klaerner aren’t ready to speculate. New venture rounds, licensing deals, possibly an IPO at some stage, are all possibilities.

“Our focus is on building shareholder value and doing the right thing and then leaving all options open,” says Shepard.