Biotech startup scores $20M C round for OTC weight-loss product and diabetes med

Elcelyx Therapeutics has landed a new investor as the biotech startup advances two lead products toward two major markets--weight management and diabetes. Veteran investment pro Rick Barry has stepped up to lead the San Diego startup's $20 million Series C round via a sole-purpose fund, which joins a syndicate that includes the big-named venture backer Kleiner Perkins Caufield & Byers, Morgenthaler Ventures and Technology Partners--all of which pitched in to the new round. Barry joined the startup's board as a director.

With a new financing round, Elcelyx has raised $43 million since launching in 2010. And every dollar counts in business plans involving weight-loss and diabetes products, which have been out of reach for most startups to advance alone because of the high safety requirements and large clinical studies required to gain access to the market. This week Novo Nordisk ($NVO) fell hard after U.S. regulators denied approval of its long-acting insulin for diabetics called Tresiba, asking for additional safety data.

Yet Elcelyx has built safety and reduced regulatory risk into its development plan. Its lead diabetes drug is a delayed-release version of metformin, designed to carry the active ingredient into the lower gut and reduce wider systemic exposure that can lead to unwanted side effects in patients, particularly those with kidney problems who are unable to take generic metformin. In a Phase IIa study, the delayed-release metformin candidate, dubbed NewMet, nailed the goals of reduced blood glucose and better tolerability than standard metformin, which is already one of the most widely prescribed and well understood diabetes drugs in the world. 

On the weight-management front, Elcelyx is advancing a propriety mix of known dietary ingredients in a developmental product called Lovidia, which could be used as an over-the-counter supplement or food additive. While company CEO Dr. Alain Baron has told FierceBiotech that his company is applying drug-like scientific rigor in development of Lovidia, the product won't have to clear the daunting FDA review process that weight-loss pharmaceuticals face. And a previous version of the product reduced body weight in patients without diet and exercise in a study, while doubling hormones in the gut that regulate blood sugar and tell the body it is full.

Despite the reduced risk in the development plans, Elcelyx still wants to eventually land a partner to help bankroll next steps for the products. (It's all but impossible for any startup to go to market with weight-loss and diabetes products without a deep-pocketed partner nowadays.)

"Elcelyx is accumulating impressive clinical data for NewMet and Lovidia demonstrating the product candidates' ability to meaningfully improve glucose regulation and reduce weight with minimal side effects, respectively," Baron said in a statement. "The Series C financing will enable us to build the value of both products and reach important data read-outs that will be attractive to potential partners."

- here's the release
- see Xconomy's article

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