Visterra snags contract to start recovery from IPO misstep

Employment contract
The CARB-X contract positions Visterra to take its Pseudomonas antibody-drug conjugate up to an IND filing.

Visterra has begun efforts to bounce back from its failed IPO attempt by securing a contract from CARB-X. The public-private preclinical antibiotic development partnership is putting up $7.2 million to enable Visterra to prepare an antibody-drug conjugate (ADC) against Pseudomonas bacterial infections for clinical trials.

Cambridge, Massachusetts-based Visterra made headlines earlier this year when it tried and failed to pull off a $50 million IPO. That setback left Visterra without an anticipated source of funding for its two most advanced assets. But the antibody player has now shown it still has a knack for tapping other sources of funding to support programs. In this case, Visterra has turned to the recently created Combating Antibiotic Resistant Bacteria Biopharmaceutical Accelerator (CARB-X) for money.

CARB-X has awarded Visterra a $7.2 million contract to support preclinical development of VIS705, an ADC against Pseudomonas aeruginosa. The contract tees up Visterra to advance the asset up to an IND filing.

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Visterra won the contract on the strength of the potential for a single dose of VIS705 to wipe out an infection of Pseudomonas, including any strains that are resistant to multiple drugs. To do this, Visterra has strapped an antimicrobial peptide onto an antibody. Visterra designed the antibody to target Pseudomonas bacteria and alert the immune system to their presence.

"The antibody enhances killing by the human immunological cells," Visterra CEO Brian Pereira, M.D., said. "And the drug causes direct killing of the bacteria. So this is a one-two punch."

Visterra had yet to select a lead candidate from its Pseudomonas program as recently as its failed IPO attempt in January and, as such, the asset is a long way from showing it can perform as hoped. But the CARB-X contract positions Visterra to learn more about the ADC while delivering a boost to its business following the bruising IPO experience.

NIAID, BARDA and four life science accelerators came together to create CARB-X to fund early-stage antibiotic research last year. Boston University, RTI International and the Broad Institute are also involved.

Visterra made contact with CARB-X last summer when the latter put out a request for proposals. Pereira said that led to more than 160 expressions of interest. Subsequent screening by CARB-X whittled down this list and resulted in Visterra walking away with $7.2 million.

The contract secures the near-term future of VIS705, but the situation is less certain for Visterra’s other programs. Visterra wanted the IPO monies to fund its share of a phase 2b trial of VIS410—an antibody partly supported by a BARDA contract—and to take VIS649 through preclinical research and into a phase 1b. Having encountered a biotech IPO environment Pereira described as “not conducive” to early-stage companies, Visterra will now need to look elsewhere for money.

Pereira said Visterra could approach the task one of two ways: “We have a very strong syndicate of investors, plus many of our products have attracted a lot of attention from the Big Pharma and Big Biotech companies. We're very confident that we will be able to fund the company to success.”

With Visterra having planned before the failed IPO to start the phase 2b of VIS410 in the first half of this year—and with it having had $14.3 million in cash as of the end of September—money is needed to keep the project moving forward.

Progress was stuttering even before the IPO setback. The FDA placed a partial clinical hold on a phase 2a trial of the asset one year ago following reports of gastrointestinal safety events, forcing Visterra to run a phase 1 in healthy volunteers to assess the optimal pretreatment regimen. The agency lifted the hold in September, setting Visterra up to start speeding forward again, funding permitting.

Visterra has leaned on some big-name backers to support its progress to date. Merck Research Labs Venture Fund co-led a $30 million Series B in 2014. And backers including the Bill & Melinda Gates Foundation, Flagship Ventures and Lux Capital chipped in to a similarly sized A round.