Argos turns to unusual players for $42.5M needed to fund PhIII cancer study

Argos CEO Jeff Abbey

With a Phase III cancer immunotherapy study under way, Durham, NC-based Argos Therapeutics today put in place its fifth fundraising, banking $42.5 million from a big group of backers led by a pair of unorthodox players.

Russia's Pharmstandard International led the round, making its first investment in a U.S. biotech company. Pharmstandard sunk $30 million into the company and took Russian commercialization rights for AGS-003, an immunotherapy being tested in a Phase III study for metastatic renal cell carcinoma.

New investor Green Cross Corporation of Seoul, Korea joined the round--picking up Korean rights to the cancer immunotherapy in the deal--along with existing investors, including Forbion Capital, TVM Capital, Lumira Capital, Intersouth Partners, Caisse de depot et placement de Quebec, Morningside Group and Aurora Funds. 

Argos' claim to fame lies in what the company calls a new-and-improved dendritic cell technology--the basic approach that brought Dendreon ($DNDN) to a pinnacle of fame with Provenge before the company quickly began to succumb to major oral competitors.

It wasn't easy getting to this point, says CEO Jeff Abbey. After Provenge flopped in the marketplace, it grew increasingly hard to raise new cash to back the company. A deal with Japan's Kirin fell through when the company merged with Kyowa Hakko. And no major partner came along to pick up the expensive Phase III costs.

Abbey, though, goes to some pains to distinguish Argos' work from the complex and now largely discredited dendritic cell approach at Dendreon that has proven devilishly difficult to profit from.

"We're programming dendritic cells with all of the antigens from the patients' cancer, including the mutated antigen," Abbey tells FierceBiotech. "And that's where we part company with everybody else."

Using technology licensed out of Duke University, the company's AGS-003 program relies on a small tumor or blood sample and the patient´s own dendritic cells, which are amped up following a single leukapheresis procedure. The process uses RNA isolated from the patient sample to program the dendritic cells to target the entire disease-antigen "repertoire." 

Amping up the personalized aspects of the treatment should work in a broad variety of cancers, says the CEO. And all the manufacturing work needed to make these personalized therapies can be completed in a single facility. 

But Abbey also acknowledges that Argos is trying to do something that few biotech companies have managed before. He's familiar with the Feuerstein-Ratain Rule, which holds that no small cap biotech has ever successfully completed a Phase III cancer study. (The rule concludes that a really promising cancer therapy would either drive up a company's stock beyond a $300 million value or persuade a bigger company to come along and partner on the drug or buy the company.) And it hasn't been easy raising new funds for the study.

"I'd be lying if I said we didn't talk to the likely suspects for partnering over the last year and a half, and we continue to," says Abbey. "I would say that there remains, if not a bias, a skepticism against personalized cell therapy for cancer because of Dendreon."

But on the other hand, he adds, there's a chance that the company can go public with a bang or do a sizeable deal before the end of Phase III. So the game isn't played out. And if he can raise about $18 million more from investors, he'll have the $60 million needed to complete the late-stage study.

Argos hasn't let the fundraising challenge stop it from hiring up. The biotech has added dozens of employees, says Abbey, boosting its employee roster to 90 in anticipation of going all the way through late-stage testing. 

"Pharmstandard's investment in Argos is a major component of the globalization of Pharmstandard's operations and its focus on identifying innovative cell-based therapies," said Alexandr Shuster, president of Inbio Ventures, a management company which represented Pharmstandard in the deal, "Immunotherapy is increasingly recognized as a treatment that will represent a new paradigm in the management of cancer. Pharmstandard was impressed with the Argos science, management team and progress of its clinical trials in both cancer and HIV."  

- here's the press release

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