Catalyst Biosciences maps out its (near) future
Biotech companies have always touted each new round of investment capital as a tangible validation of their development work. And with the capital markets seizing up around the globe, that badge of distinction is now shining brighter than ever.
Just ask Nassim Usman, PhD, the CEO of Catalyst Biosciences.
"Here we are in the midst of one of the worst financing times, yet we were able to finance the company," Usman told me last week, shortly after announcing a $40 million Series C for Catalyst Biosciences. "It's extremely bad out there. It's very difficult to raise capital."
If you're a small-cap public company, he adds, these are particularly hazardous times. But Usman says an early-stage biotech company that doesn't require a huge amount of capital and has bright development prospects can still find backing.
A veteran research scientist with executive experience at several biotech companies as well as an entrepreneur-in-residence at Morgenthaler Ventures, Usman has a unique perspective on what does appeal to the investment crowd these days. And he uses Catalyst as an example of the kind of developer that fits the bill.
"I had worked on two platform technologies at Sirna Therapeutics and Ribozyme Pharmaceuticals," he notes. "I'm interested in platforms that can generate lots of products."
With Catalyst's Alterase platform, "we take a protease and we change its specificity. We engineer it to cleave to a disease-causing protein of choice, like antibody development. We'll make a protease that will cleave to that target--cleave to it and do it again and again and again, and completely inactivate the target."
The intention isn't to inhibit proteins, but to increase their activity, says Usman. There are several such therapies already on the market, like Botox and factor VIIa, which is used to treat hemophilia. And while no one is looking for a better Botox, the world could use a better factor VIIa.
"People do need better versions so we can increase their activity," he notes. "And this was already validated in the sense that there were already drugs that people used. That's why I found the company so attractive. With VIIa, we weren't going to change specificity. We were just going to make it better."
But why aim a platform technology with potential in metabolic disease and inflammation at a rare disease?
"It's an easier technology," responds Usman. "Yes, it's small in the number of patients, but factor VII sells over a billion dollars a year. You can also get clinical proof of concept in Phase I. Animal models were completely predictable. All the pieces fit together for a small biotech."
That Phase I data on CB 813 should arrive in late 2009 or early 2010.
"Then we'll evaluate whether we would like to find partners or push through on our own," he adds. The ultimate direction they take will be heavily influenced by the state of the financial market when they come to that fork in the road.
"We may need to have a partner, or, if the market is more receptive, we could raise funds," says the CEO.
Catalyst was formed in 2003 on the scientific work done by Charles Craik, PhD, and two post-docs at UC San Francisco. Craik is chairman of Catalyst's scientific advisory board. But it wasn't until the $30 million Series B in 2006 that Usman came in as CEO. The developer was so small up to that point, he adds, that it didn't really need a CEO.
"When they brought in a $31 million Series B, it was time to bring in a full-time CEO."
The last venture round takes Catalyst out "several years, depending on how much licensing and partnering we do," says Usman. "On the Alterase side, it's a big platform and there's a fair amount of pharmaceutical interest which can bring in several million dollars a year to finance the company."
In the latest venture round, new investor Essex Woodlands Health Ventures led the way, with participation from existing investors Burrill & Company, HealthCare Ventures, Johnson & Johnson Development Corporation, Morgenthaler Ventures, Novartis BioVentures and Sofinnova Ventures.
Two partnerships have already been inked, with Centocor and Wyeth.
"Our internal lead Alterase AMD program we would like to retain for ourselves at least through Phase I," says Usman. "Again, we'll get clinical signs of activity in Phase I. We'll have a development candidate in 2009, and so we anticipate getting to the clinic toward the end of 2010.
"We would like to keep two or three ongoing partnerships at a time, balancing working with partners for bigger therapeutic areas that we don't have the muscle to do on our own, and our own programs like (age-related macular degeneration) and hemophilia."
Currently, Catalyst has 50 workers, and Usman says he expects the head count to remain at that level for 2009. And Usman isn't making any predictions which way the company heads after that.
"It's hard to design a company to be sold, or design a company to be public," says Usman. "You need to build a really good asset that people will want. That's what we always focused on: building good value."