UPDATED: Atlantic Healthcare closes $24M round and gains Salix founder as new CSA

Atlantic CEO Toby Wilson Waterworth

Atlantic Healthcare has raised $24 million in its latest financing with the founders of Salix Pharmaceuticals ($SLXP) and Clinigen Group stumping up much of the cash.

The money will help the U.K.-headquartered firm secure enough funds to complete its Phase III trial of alicaforsen in pouchitis, and then file for regulatory approval in North America and Europe from next year.

Dr. Lorin Johnson, scientific founder of NC-based GI specialist Salix, has also joined the board of Atlantic while also taking on an executive role as the firm's new chief scientific adviser.

Johnson worked at Salix until its multi-billion dollar buyout in April last year by Canada's embattled Valeant ($VRX). Prior to Salix, Johnson was chief scientist at California Biotechnology.

Like ulcerative colitis (UC), pouchitis is a progressive disease marked by inflammation, ulceration, increasingly uncontrolled, frequent and urgent emptying of the bowel and is a common complication of ileal pouch surgery. Around 100,000 people are believed to have it in the U.S. with similar numbers affected in Europe.

There are currently no approved treatments in North America or Europe for the condition, but there are other firms looking to develop a new drug for the disease. Currently, Baxter's ($BAX) 2014 biotech acquisition AesRx is currently working on mid- to late-stage trials of its investigational pouchitis treatment clotrimazole enema for the condition.

Alicaforsen enema is an antisense oligonucleotide and is targeted to ICAM-1--a cell-surface protein that is involved in the inflammatory response and over-expressed in patients with inflammatory disease.

Originally developed as an IV formulation for Crohn's disease from California's Ionis Pharmaceuticals (formerly Isis Pharmaceuticals), alicaforsen enema is now being developed as a locally active topical formulation. The drug has already been granted an FDA fast-track designation, as well as FDA and EMA orphan drug designation in pouchitis--meaning it could be on the U.S. market by early 2018.

Last month, Atlantic Healthcare began recruiting 138 patients for its latest Phase III trial, with results expected to be reported in the middle of next year. The drug is taken once a day for 6 weeks, usually at night, with peak response expected 4 weeks after ending treatment.

The $24 million came from the founders of Salix, Fullbrook Thorpe Investments (the family investment arm of Andy Leaver, founder of Clinigen Group), LDC (the private equity division of Lloyds Banking Group), and other existing investors.

Toby Wilson Waterworth, CEO and founder of Atlantic Healthcare, told FierceBiotech: "The round we've just completed will take us through to 2019, so we're very well-funded. We will need more money in the future of course for extra indications and studies, and we're happy to see that come from private institutions or investments, or we may actually float the company in the U.K. or the U.S."

Looking down the road, Atlantic is also looking to market the drug for both UC and Crohn's disease--two potentially lucrative licenses, but ones that will come into a crowded market place that will soon swell with a cheap bevvy of biosimilars.

Waterworth is confident however that alicaforsen's mechanism of action will help it stand out: "We feel we are well differentiated from other medicines on the market as we are developing a completely new class of drug and it has unique properties. The feedback we get from doctors and patients is that they want to use our drug before any of the biologics out there.

"We see this as being attractive to patients because it's efficacious and, because it's a local topical therapy, it has little systemic absorption [less than 1%] and therefore has much fewer side effects than the immuno-suppressants currently on the market--which can increase the risk of infections and even some cancers. We've had no directly-related SAEs from any of our studies associated with the drug--and that's a major plus."

Waterworth added that he was "delighted to welcome" Johnson to Atlantic Healthcare. "Johnson is the most experienced person in the GI field and we will look to his tremendous experience in building Salix from the ground up 25 years ago into such a successful company."

While not giving a dollar estimate on what the drug may achieve, Waterworth is confident this will be a big money-spinner for the firm. "If we can get approval for the indications we want, we can see this drug being a blockbuster for us. And so we also see this as being a great cash cow for us to develop into a bigger international company in the future."

- here's the release