Emerging Drug Developer: Bayhill Therapeutics

Bayhill turns to deal-making to fund its growth

Mark Schwartz, PhD, doesn't like the idea of ranking Bayhill Therapeutics' two clinical programs.

"We're working on a very innovative and new technology," the CEO explains. And when you learn something about one program, it helps the others.

That unified approach to drug development may help explain why San Mateo, CA-based Bayhill just completed a $350 million partnership deal with Genentech for a clinical development program still in a Phase I/II trial for Type 1 diabetes, while its most mature program--a therapy for multiple sclerosis which completed Phase II--remains unwed. 

But Schwartz also would like to have a deal relatively soon for MS.

"We are in active discussions as we speak," he tells FierceBiotech.

"We have completed Phase II data," Schwartz explains. "There was a publication that came out, if I remember right, in early ‘08, but we still had the follow-up phase of the trial. That data was recently presented in Seattle, just last month, so that really was the first full release of the complete trial. The most significant part of the data, we saw a very dramatic reduction in relapse rates which coincided with a reduction in lesions."

For the past seven years, Bayhill has been exploring a new approach to treating a long list of 28 autoimmune diseases. The developer has programs for two big targets in multiple sclerosis and Type 1 diabetes, with a third program in the preclinical phase focused on myasthenia gravis, an autoimmune disease which blocks nerve impulses and muscle stimulation via the neurotransmitter acetylcholine, affecting some 60,000 people in the U.S.

"There are a significant number of companies working in immuno-modulation, very few working in antigen-specific tolerance," says the CEO.

The proper role of the immune system, he explains, is to identify invading, foreign antigens and stopping them, while leaving the body's self-generated antigens alone. The immune system determines "who's wearing my uniform and who's wearing the other side's uniform."

For people with an autoimmune disease, though, the system breaks down, and attacks every antigen, regardless of uniform. The immune system winds up attacking the wrong targets, triggering diseases.

"What Bayhill is trying to do, and there are only a few others working on this as well, is working on antigen-specific tolerance, trying to restore tolerance,  reeducating the immune system with a very laser-like effect," says Schwartz. "If we can do that, the whole way of treating autoimmune diseases will be radically changed.

"Our anticipation is that these will be chronic treatments. Our expectation is that we will turn off the disease process so the patient will not get worse. We don't anticipate that these drugs are curative."

Bayhill's drug will not re-grow a pancreas or the myelin sheath of the brain. On the other hand, says Schwartz, researchers don't know if the myelin sheath can repair itself under the right circumstances.

Things haven't always gone according to plan at Bayhill. The company filed for an IPO in 2008, as the market for public offerings was going from cool to arctic. Bayhill also trimmed its staff late last year, whittling its ranks down to a lean payroll of 14, with several scientific founders still playing key roles.

But even with the public window shuttered, the developer has successfully raised a total of $90 million in venture capital over the years. And its new deal with Genentech adds $25 million more in an upfront payment.

"This is a new area for them," says Schwartz. "They do have some work going on in diabetes, but this does represent in their view a best-in-class opportunity."

The new infusion of money gives Bayhill the chance to add one or two new autoimmune disease programs to the pipeline, but there's still too many variables in flux for Schwartz to lay out exactly what kind of runway can be funded at this point.

"Right now the deal side is providing the resources for us to move forward," he says. "We have always tried to be very efficient. Our platform allows us to be very efficient."

Emerging Drug Developer: Bayhill Therapeutics
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