ARMO emerges from stealth mode, preps study of discarded Merck drug

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An upstart biotech venture dubbed ARMO Biosciences has grabbed a pair of interleukin-10 programs off the shelves of Merck ($MRK) and the now-defunct British biotech Renovo, updated and improved the research strategy for solid tumors and inflammatory diseases and will now begin testing its therapy in Phase I with a $20 million investment from some high-profile venture players on the West Coast.

The key to launching Redwood City, CA-based ARMO, says CEO Peter Van Vlasselaer, was in-licensing the cytokine IL-10 program from Merck, which had wound up with the anti-inflammatory therapy after it swallowed Schering-Plough's pipeline whole. Schering researchers had done extensive clinical testing of a non-PEGylated form of IL-10, seeing an anti-inflammatory, immune-suppressing effect on psoriasis and Crohn's disease as well as a drop in liver enzymes and an impact on fibrosis. But the anti-inflammatory effect in clinical studies never achieved statistical significance and Merck lost interest after the anti-TNFs began to get approved.

Two scientists involved in the work--John Mumm and Martin Oft, then at Merck Research Labs--never lost faith, though, and were particularly excited to see an immune response to the cytokine in which killer T cells were spurred to attack tumors. That area of immunotherapy remains a big field in oncology, despite some initial missteps, generating keen interest in its potential role in combination therapies. The scientists contacted the biotech entrepreneur Van Vlasselaer to see about gaining control of the project. Van Vlasselaer then followed up by scanning the IL-10 field, acquiring Renovo's IP in order to make sure the company had the intellectual property locked up. The company is backed by Kleiner Perkins Caulfield and Byers, OrbiMed and DAG Ventures.

"We captured everything under the sun," says the CEO, who says the $20 million in financing used to launch ARMO late last year will also pay for a Phase I cancer immunotherapy study for AM0010, exploring its potential at spurring a tumor-specific attack by CD8 killer T cells. The first patient will be enrolled in days. And then the biotech will have a chance to build up a pipeline of programs around their lead therapy, including studies for fibrosis, homozygous familial hypercholesterolemia and other indications.

The first results from that Phase I study should be available next year.

"We see enormous potential in the development of this promising molecule," noted Beth Seidenberg at KPCB, who will be shepherding their investment in the company.

- here's the press release

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