NeurAxon builds a house on pain

In his own words, Lawrence Bloch believes in putting his money where his mouth is.

For the last few weeks, his mouth has devoted much of its work to touting the future of NeurAxon, an early-stage biotech that sees a lot of late-stage potential for a pain therapy that targets neuronal nitric oxide synthase, or nNOS. And now his money is following his mouth’s lead. When the Waltham, MA biotech announced a second venture round of $32 million in late August, the newly-appointed CEO was listed as an investor in the company.

“The company was two-and-a-half years old when I first started speaking with them,” says Bloch, MD, JD, the former NitroMed CFO who had been keeping a sharp lookout for platform companies that had some high up-sides on value.

Of course, he adds, high value can also be high risk. But so far, he says, NeurAxon has been advancing experimental therapies at an extremely speedy pace.

“With 13 employees, 3 years and $10 million in cash, we’ve done what no Big Pharma company can do: we have a first-in-class nNOS inhibitor for pain. With that progress, we’ve got really clean Phase I data we leveraged with blue chip life sciences investors, gaining $32 million.”

Delphi Ventures and OrbiMed Advisors led that round, with BDC Venture Capital, Genesys Capital Partners, H.I.G. Ventures, NeuroVentures Fund, Ventures West Capital Ltd joining in with Bloch.

Eventually, as the programs advance, there could be an IPO to discuss. Or maybe even a merger with a bigger company.

Or not.

“A merger and acquisition is possible,” notes Bloch, “but I believe this company has the potential to be a long-term player in the space.”

The new venture funds came days after NeurAxon announced that NXN-188 successfully passed muster in a Phase I trial that examined safety and its pharmacokinetic profile. What makes NXN-188 unique, he says, is that it provides a dual action nNOS inhibitor and 5-HT agonist that has the potential to beat out triptans--a standard therapy in the $3 billion market for treating acute migraines--on a variety of levels.
It’s not a combinatorial product, Bloch emphasizes. “It is a small molecule that has two active, different drug mechanisms in it.”

But Bloch emphatically isn’t putting all of his biotech eggs in one basket.

“Certainly your lead compound garners the most attention,” says Bloch. “Internally we expect multiple drugs in proof-of-concept during the course of our recent financing. Nine months ago our lead compound was preclinical, but it’s not necessarily more attractive than any of the others. We are going to be pushing all of our candidates as fast as possible.”

To get there, Bloch says the company head count of 13 will expand to 30 or 35 workers. The research and science part of the business was founded in Toronto, and will remain there, says Bloch. A few more hires will be added to Toronto’s ranks but most of the new employees will be joining Bloch in Waltham, where he will remain.

Those new workers should help advance the biotech’s development speed.

“The FDA has its own review cycle, of course,” says Bloch, “but we think that this time next year we expect to have Phase II completed on our lead program, have Phase 1 on another, and another drug in human clinical trials. By the end of next year, he adds, all five programs should be in the clinic.

Somewhere along the way to a late-stage study, says Bloch, the biotech expects to strike up a development pact with a Big Pharma partner.

“The reality is that these drug leads address extremely large markets,” says Bloch. And those kinds of markets demand large marketing departments and deep pockets--a lesson Bloch gained from his experience at NitroMed. NitroMed you may recall was able to get an approval on BiDil, but later ran into a raft of problems when it began marketing the drug.

“We’d be looking for a pain specialist pharma partner,” adds Bloch. But only after Phase IIb proof of concept. “We have the scientific and clinical ability and the venture resources to add value all the way through proof of concept.”

Spoken like a true investor.