After blowup, biotech vets regroup, bag $40M for NASH 2b

microscope image of nash
Nonalcoholic steatohepatitis. (Courtesy of Michael Bonert CC BY-SA 3.0)

Frazier Healthcare Partners has once again installed a trio of biotech veterans at the helm and put up some of the cash they need to get through a vital trial. The executives, whose careers have crossed at companies including Laguna Pharmaceuticals and NovoCardia, have landed $40 million from Frazier and other backers to take a NASH candidate through phase 2b.

Bob Baltera, Howard Dittrich, M.D., and Brian Farmer first came together at Laguna Pharmaceuticals, where they briefly tried to push an atrial fibrillation candidate through phase 3 using $30 million from Frazier and other investors. Safety issues cut that attempt short and sunk Laguna. But Frazier has now returned to the same playbook, once again rebranding a midwestern biotech, setting it up on the West Coast and giving it the cash to generate key clinical data.

The biotech undergoing the transformation this time is Octeta Therapeutics, a Michigan-based company that has gained a San Diego office, a new leadership team and identity and up to $40 million. Octeta is now known as Cirius Therapeutics. Baltera, Dittrich and Farmer have come on board as CEO, CMO and chief business officer, respectively. And Frazier has joined with Novo A/S to lead a $40 million round intended to get a NASH asset through a phase 2b.

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MSDC-0602K, an insulin sensitizer, is the cause of the flurry of activity. Interest in the candidate is underpinned by evidence that insulin-resistant dysfunctional adipose tissue plays a role in development of NASH. Trials of first-generation insulin sensitizers including Actos, Avandia and Rezulin in the general NASH population have generated mixed results. But when investigators gave Actos to patients who also had Type 2 diabetes, 58% hit the primary endpoint, compared to 17% in the placebo arm.

That 101-person study suggested that Cirius’ metabolism-modifying approach to NASH treatment has potential, but also showed the shortcomings of first-generation insulin sensitizers. Patients in the Actos arm experienced significant weight gain as compared to the placebo group. And the class is linked to other adverse side effects, such as bone loss and cardiovascular problems. Cirius thinks its candidate can deliver the benefits without the complications.

The company is testing the idea in a 200-person phase 2b trial. Investigators are accepting patients with and without Type 2 diabetes in the study, but are stratifying them by the comorbidity. The primary endpoint is a reduction of two points or more on a NASH score without worsening of fibrosis after 12 months, an outcome that is the same as that used in the Actos study apart from the duration.

If Cirius delivers positive data, it will find itself with one of the most prized assets in biotech: a promising phase 3-ready NASH candidate. Over the past few years, companies including Allergan, Boehringer Ingelheim, Bristol-Myers Squibb, Celgene, Gilead and Merck have struck deals for NASH candidates, while Genfit and Intercept Pharmaceuticals have led a pack of specialist biotechs forging deeper into the clinic.

Importantly, Cirius’ metabolism-modifying approach differs from—and is potentially complementary to—the mechanisms of action of NASH assets in the clinic at other companies, opening the door to combination therapies.

"At Frazier, we believe the future of NASH therapies will be a multidrug approach, with a need for therapies that address the underlying metabolic drivers of disease, as well as resultant fibrosis and inflammation," Frazier’s Dan Estes, Ph.D., said in a statement. "We see a distinct opportunity for MSDC-0602K to become a cornerstone therapy in NASH, both as monotherapy but ultimately as part of combination approaches."

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