VCs gamble $45M on PhII pain drug, new U.S. base for Spinifex

Spinifex CEO Tom McCarthy

An Australian biotech company with a mid-stage pain drug is using a new $45 million venture round from a group that includes a pair of marquee investors to put down U.S. roots in Stamford, CT, as it pushes ahead in the clinic. The Series C brings Spinifex Pharmaceuticals' total raise to $70 million, says CEO Tom McCarthy, with enough money committed to fund operations for the next three years.

Spinifex, which has been based in Melbourne, has been operating with a virtual team of two full-time staffers and a group of consultants. That's been enough to see the biotech through the first Phase II study of a novel drug, EMA401, that works by blocking the angiotensin II type 2 receptor--AT2--a new approach to controlling pain that marks a sharp departure from the opioids that have been coming into the market. That study, published in The Lancet, produced positive data on its effect in controlling drug-resistant pain among patients suffering from postherpetic neuralgia.

The AT2 pathway had initially been a target as a possible hypertension target, but after that approach failed to pan out investigators began to use it as a target for other conditions, both blocking and stimulating the pathway. Spinifex evidently has the most advanced program for pain, though there has been at least one animal study at Kansas University that provided some supporting evidence of its potential efficacy.

Spinifex's technology originated at the University of Queensland, which has been a financial supporter of the company as well. GBS Venture Partners, Brandon Capital Partners, Uniseed and UniQuest all joined in the latest round.

Australia offers biotech startups many advantages, McCarthy notes, including a generous subsidy for R&D expenses. The move to Stamford, he says, was made it easier to recruit a team of 6 to 7 clinical development and corporate executives who can broaden the scope of their R&D work, stay close to trial sites in Europe and the U.S. and position the company with a potential pharma deal down the road.

 "I see us as part of the biopharma ecosystem," McCarthy tells FierceBiotech. In that food chain, Big Pharma often plays the role of consumer when it comes to small biotechs. And if there's no deal, then Spinifex will have a shot at pushing on solo.

In recent years pain therapies, like other drugs in the CNS field, have been beset by repeated setbacks, sometimes done in by unexpected side effects or a high placebo response. McCarthy says he's acutely aware of the risks involved, but the potential benefits to be had from something other than a "me-too" pain drug shouldn't be dismissed. And the market rewards awaiting a new product, he adds, makes the risk they're run well worth the $70 million gamble.

"Despite its prevalence and debilitating effect on patients, chronic pain remains poorly treated," says Novo's Heath Lukatch, who's joining the board now. "EMA401 was effective and well tolerated and thus showed potential to provide pain relief without the side effects, particularly CNS side effects, which limit the benefit of existing treatments for many patients."

- here's the release