Zenas zips up $118M to launch phase 3 for rare autoimmune disease candidate

Zenas BioPharma has raised a $118 million series B to zoom in on a pipeline of immune-based therapies and launch a phase 3 for its lead candidate that was licensed from Xencor less than a year ago.  

The Massachusetts biotech will use the equity financing to start a global phase 3 trial by the end of this year for lead candidate obexelimab. The bispecific antibody is being assessed in patients with IgG4-related disease, a chronic fibroinflammatory disease that can affect multiple organs and sites.

Zenas acquired exclusive worldwide rights to obexelimab in late November 2021, when Xencor sold the autoimmune disease candidate in a backloaded deal worth up to $480 million. The bispecific, which targets CD19 and FcγRIIb to inhibit the function of B cells, was once a focal point for Xencor. In 2018, the company had planned to take the candidate into a phase 3 study for IgG4-related disease only to change its mind in the aftermath of a failure in lupus.

Xencor profited little from the deal in the short term. The company already held a 15% stake in Zenas, valued at $16 million, as part of a deal for three preclinical assets. The licensing deal allowed Xencor to keep its stake at 15% when Zenas closed its next financing round, which occurred yesterday. 

However, the deal over obexelimab could prove more lucrative for Xencor in the long term. Zenas is on the hook for up to $480 million in clinical, regulatory and commercial milestones, plus royalties.

Zenas’ new funding will also help progress its other autoimmune disease programs into clinical development in 2023. Set up by Tesaro co-founder Lonnie Moulder, Zenas touts a clutch of candidates from deals with Dianthus and Viridian as well.

The series B equity financing was led by Enavate Sciences, which was formed by healthcare investment firm Patient Square Capital this spring. The firm cashed in $300 million to create the portfolio company, which is designed to support and grow a series of therapeutics companies.