Scholar Rock bags $36M to fuel muscle-wasting drug program, first clinical study

Scholar Rock CEO Nagesh Mahanthappa

With an eye to jumping into the clinic with a lead drug for muscle wasting while building up a pipeline of drugs that target key growth factors, Scholar Rock is refueling for its next stage of development with a $36 million B round from a group of investors led by Fidelity Management and Research.

Cormorant Asset Management also stepped in as an investor for the first time, joining a group of existing backers that includes Polaris Partners, Timothy Springer--a scientific founder at Harvard--ARCH Venture Partners, EcoR1 Capital and The Kraft Group.

The Cambridge, MA-based biotech has been working for the past two years on what it sees as a much better therapeutic strategy for blocking myostatin, a protein that hits the brakes on muscle development. By going after a "latent precursor" of myostatin, Scholar Rock is betting that it has found a drug that can durably and more safely build muscles among patients suffering from muscle atrophy with a more potent dose.

Just a few weeks ago a more advanced rival myostatin program at Atara for protein energy wasting had to be scuttled after it flopped in Phase II. But Scholar Rock says that setback along with other failures in the field can be skirted with their original strategy of bypassing mature myostatin and its receptors and focusing much earlier in the disease process.

"We are upstream of all the other processes," says CEO Nagesh Mahanthappa. "We're hitting the molecule where it lives."

Its versatility in modulating the impact of growth factors on the immune system, first broached in Springer's lab, also helped attract Johnson & Johnson ($JNJ) to a very early partnership on controlling autoimmune diseases. Conversely, there's a role to be played here in accelerating an immune system attack.

Scholar Rock, though, remains well behind the leader in the clinic.

Novartis ($NVS) jumped on board MorphoSys' antibody discovery platform to find BYM338. Also known as bimagrumab, the treatment reins in myostatin and is in the clinic for a rare, muscle-wasting disease called sporadic inclusion body myositis (sIBM) with potential for cachexia, COPD and sarcopenia. Back in the spring of 2014, MorphoSys execs put its peak sales potential at a whopping $4 billion while the FDA has handed out its breakthrough therapy designation alongside its commitment to speed development efforts.

Knocking down myostatin, though, could also be potentially dangerous. Peter Ganz at UCSF has also studied myostatin in preclinical studies, recently determining that lower levels of that protein alongside reduced levels of GDF11 were linked to thickening heart muscles and heart failure.

It's also no simple matter to knock down myostatin in order to build muscle to fight wasting, as Atara--an Amgen ($AMGN) spinoff--found out days ago when it announced that its clinical candidate PINTA 745 failed a Phase II study for protein energy wasting in patients with end stage renal disease, forcing the biotech to halt development efforts and switch focus to cancer. Back in 2011, Acceleron ($XLRN) and Shire ($SHPG) halted clinical work on ACE-031, another myostatin drug with big dreams in fighting muscle wasting, then decided to scrap it altogether in 2013 after running some additional preclinical tests.

- here's the release