Third Rock, biotech VCs make baby formula gambit

Some of the usual suspects in biotech venture investing are backing an unusual startup that aims to improve digestion of nutrients in products such as baby formula. Alcresta, which has been operating under the radar since last year, has revealed its $10 million Series A round of venture capital with investments from Bessemer Venture Partners, Frazier Healthcare and Third Rock Ventures.

With know-how picked up during years spent at biotech companies such as Altus Pharmaceuticals and Alnara Pharmaceuticals, the team at Alcresta is developing enzyme-based products that are designed to boost the absorption and digestion of nutrients in patients whose bodies lack certain enzymes. Their first product aims to support absorption of omega-3 and omega-6 fatty acids, which are now common ingredients in baby formula because of the nutritional benefits of the additives.

In premature newborns, for example, the digestive system lacks certain pancreatic enzymes that are required to absorb triglyceride forms of these so-called "good fats" like omega-3 and -6 put in baby formula. Exact product delivery strategies are being worked out at Alcresta, yet COO Bob Gallotto says one scenario for using the company's enzyme-based product would be adding it to baby formula just before it's given to newborns. Beyond baby formula, the company sees potential uses of its products in other populations that lack enzymes to digest good fats, including elderly people, cancer patients and people who have undergone certain surgeries.

"I think 2001 was the first time people began to supplement formula with [omega-3] and [omega-6] so now virtually all formula has [omega-3] and [omega-6]," Gallotto told FierceBiotech. "They've done a good job. We're just taking it to the next generation of products that have a little bit more technical opportunity to be able to provide what patients need."    

Same management, same investors, two different startups

Gallotto and Alexey Margolin, Alcresta's chief executive, raised the first-round financing for their nutritional startup in September at the same time they reeled in $15 million to launch another company, Allena Pharmaceuticals, Margolin tells FierceBiotech. When Margolin and Gallotto unveiled Allena in November, however, they failed to mention that they had started Alcresta at the same time because they didn't want the non-traditional business model under which they are operating the two complementary but separate ventures to overshadow the different focuses of each new startup, Margolin says.

Allena--which is also backed by Bessemer, Third Rock and Frazier--is developing enzyme-based treatments for rare and metabolic disorders that patients take orally. Gallotto and Margolin say a full-time staff of 8 people based in Newton, MA, work for both Allena and Alcresta. Yet each company is a separate C corporation with its own shares. Margolin stressed that each company has different business development objectives, with Alcresta serving the nutritional market and Allena focused on pharmaceuticals.

Same drivers, different routes to market

Alcresta's enzyme supplements for use with baby formula could be on the market as early as next year, Margolin says. Yet Allena's disease treatments are expected to undergo three phases of clinical trials that can take 7 years or more to complete.

Indeed, nutritional products travel a much shorter route to market than most drugs, and few people understand this better than Margolin.

He spent years as chief scientist at Altus, which flamed out before any of his R&D projects achieved commercial success. He then formed a startup called Alnara Pharmaceuticals, which picked up an enzyme-based treatment called liprotamase from Altus in 2009, and he then sold Alnara to Eli Lilly ($LLY) in 2010. Gallotto was also an executive for Altus and Alnara.

Last year, the FDA denied Lilly's bid for approval of liprotamase for patients with cystic fibrosis, asking for more clinical data from the Indianapolis-based drugmaker.

- here's the release

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