When former Merck Chief Development Officer Jay Galeota joined Kallyope in August 2021, the plan was to take the gut-brain axis biotech public. But for drug developers, the stock market has taken a turn down a treacherous path.
The six-year-old biotech pivoted instead to raise $236 million in a series D that could set Kallyope up for an initial public offering as soon as the second half of this year or, depending on how long the markets are "less desirable," all the way until the end of 2024, Galeota said in an interview.
Aside from Galeota's appointment and announcing rounds of funding, the biotech has remained largely silent since inception as it's been heads-down working on the science, the CEO said.
The 2018 Fierce 15 biotech will use the fresh proceeds to bankroll three compounds that entered phase 1 trials within the past 13 months for Type 2 diabetes, obesity and inflammatory bowel disease, Galeota said. Those assets—K-833, K-757 and K-196—are among 22 total compounds in the company's roster. Eight of those have been through preclinical toxicology, he said.
"We're using the gut as a gateway to the brain for system effect, which is really important because targeting sensory cells in the gut that elicit a systemic response from the brain obviates the need for high-circulating blood levels of drug to get to the desired, which carries with it obviously a benefit of more precise delivery with less chance of off-target activity or drug-drug interactions," Galeota said.
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Going forward, Kallyope will bring three more programs into the clinic in the coming years, Galeota said. The company also looks to strike strategic partnerships, a job he became familiar with during his time as chief strategy and business development officer at Merck from 2014 to 2016.
"We've got capabilities, but we've got a bandwidth issue, a capacity issue, because of the productivity of the pipeline so far," Galeota said, referring to the need to partner up with a pharma to help speed up and expand the scope of Kallyope's R&D.
Galeota took over six months ago from founding chief executive Nancy Thornberry, who moved to the chair of R&D role. The duo worked together at Merck, where they helped develop and commercialize sitagliptin, now known as Type 2 diabetes med Januvia, and its offshoot Janumet. The two drugs reeled in $5.28 billion in sales in 2021, the pharma reported Feb. 3.
The financing, led by Mubadala and The Column Group, adds to a $112 million series C disclosed in March 2020. The Bill Gates-backed biotech has raised almost $480 million since inception.