Privately-owned Austrian biotech Apeiron Biologics on Feb. 3 attracted £11 million ($17.5 million) in upfront cash and equity from GlaxoSmithKline for full rights to its Phase I biologic for acute respiratory distress syndrome (ARDS).
The deal signals GSK's continued interest in accessing compounds that address challenging and often specialist areas. ARDS affects about 1 million people per year in developed markets (an incidence roughly similar to that of colon cancer). But it isn't a primary event - ARDS is associated with a range of complex conditions such as sepsis, trauma and post-operative complications. There are currently no effective treatments.
Apeiron's asset, APN01, is recombinant human Angiotensin Converting Enzyme 2, rhACE2. The Big Pharma has also promised up to £207 million in development milestones should the compound succeed in three indications, as well as royalties on net sales.
From GSK's point of view, this is small-fry financially, and relatively back-end weighted, a characteristic of many early-stage Big Pharma licensing deals. (Note, however, that it isn't an option-deal, as many of GSK's alliances are.) Yet for Vienna-based Apeiron, the upfront payment alone is more than the €10 million it has raised since inception from Austrian and European Union grants (€3.5 million) and business angels (€6.5 million). company has no venture capital investors.
GSK proactive in hunting novel, challenging, specialist drugs
What's more, Apeiron wasn't actively seeking a partner for the project; instead, GSK approached it. "We got an email [from GSK] 14 months ago telling us that this area was of interest to them, and asking whether we would like to discuss an alliance," recalls CEO Hans Loibner, PhD. That prompted Apeiron to initiate a structured bidding process, to which they attracted other parties. GSK won based on "our feeling that their interest was genuine" and that they had the expertise and motivation to take the project further, he explains.
The deal was orchestrated by the Big Pharma's Respiratory Center of Excellence for Drug Discovery (CEDD), one of the half-dozen or so semi-autonomous therapeutic-area focused units that comprise GSK's R&D operations. The company's Biotherapeutics CEDD was also involved, given that this project is a biologic.
Successfully developing APN01 in ARDS will be tough, though, notwithstanding the commercial opportunity due to a lack of existing treatments (aside from mechanical ventilation). "ARDS has been under-estimated for many years" says Loibner, in part because it occurs as a result of other conditions. It's also highly complex and affects multiple organs including, primarily, the lungs. The mortality rate for this most severe form of lung injury is 30 percent to 50 percent, according to Loibner.
Track records of drugs for similarly complex - and associated - conditions such as sepsis help explain why these areas still represent an unmet need. Lilly's activated Protein-C drug Xigris , for example, was a commercial flop and its follow-on was farmed out to biotech company Cardiome in 2007 ('Son-of-Xigris goes to Biotech--Where it Belongs?' IN VIVO, Jun 2007).
As such, "we were impressed that GSK has the courage" to take on this development challenge, Loibner admits to The Pink Sheet DAILY. Indeed, he points out, since Protein C increases the expression of natural ACE2 (of which Apeiron's drug is the recombinant version), "there is a biochemical connection" between the two.
Yet according to Apeiron's founder Josef Penninger, (who is also scientific director of the Institute of Molecular Biotechnology of the Austrian Academy of Sciences), ACE2 plays a crucial role against lung failure and it appears that regardless of the cause of syndrome induction, "its progression can be influenced by our product," says Loibner.
The Apeiron enzyme degrades and de-activates [the renin-angiotensin system (RAS) effector peptide] angiotensin II, whose levels are pathologically high in ARDS and related conditions. This causes, among other things, the lungs to fill with fluid. The enzyme converts angiotensin II into angiotensin I, which has the opposite properties, making it capable of protecting organs. (Angiotensin converting enzyme, in contrast, catalyzes the conversion of angiotensin I into angiotensin II; ACE-inhibitors such as ramipril block this action and are used in hypertension.)
Opportunities beyond ARDS
This isn't the first time GSK (like some of its Big Pharma peers) has embraced projects that might have seemed ill-suited - or at least far too small - for the Big Pharma five to 10 years ago. In October 2009, for example, GSK demonstrated its willingness to invest in drugs for rare diseases with an RNAi-focused deal with Holland's Prosensa focused on Duchenne's Muscular Dystrophy ('The Pink Sheet' DAILY, Oct 13 2009).
The strategy in part reflects GSK's ever-evolving R&D structure, characterized by increasingly small, biotech-like units with the creative and financial freedom to take on niche drugs ('GSK Tries to Mimic Real-World Biotech', IN VIVO, Feb 2009).
Not that APN01 will necessarily be - or stay - niche. Although the primary indication for now is ARDS, there are "at least six other potential applications" for the drug, says Loibner, given the central role played by the body's renin-angiotensin system. These include kidney diseases, diabetic nephropathy, lung fibrosis and heart failure, where the compound has shown signs of pre-clinical efficacy.
As such, GSK is accessing what could potentially be a larger opportunity, akin to its March 2009 deal with Pentraxin, a University College London spin-out investigating a potential new treatment for amyloidosis. That disease is rare, but is related to a far larger commercial opportunity: Alzheimer's ('The Pink Sheet', Mar 26, 2009).
Apeiron: Bypassing the Venture Capitalists
Apeiron has benefited in its fundraising activities not only from Austria's relatively generous grants, but also from a "scarcity effect." Simply put, there aren't many other biotechs in Austria. The recent success of one of those, however - vaccine maker Intercell - helped trigger interest in Aperion from a range of high-profile angels, according to Loibner. Penninger's reputation helped, too - as did Loibner's own experience both at Novartis' Sandoz and as founder of cancer immunotherapy firm Igeneon (although Igeneon has since ceased operations).
Given the challenges that Loibner - like many other biotech CEOs - faced at Igeneon in dealing with the often-clashing priorities of management and venture capitalists, he was happy to stick to angel finance, mostly from Austrian nationals including a former economics minister and a healthcare expert within one of the country's major political parties. The company's founders, management and employees are also invested.
Apeiron has two further programs, both pre-clinical, in cancer immunotherapy and pain regulation which it will progress using the GSK funds. The biotech says it will also have sufficient money to license in other more mature projects, most likely biotherapeutics related to cancer immunotherapy. These, says Loibner, may "help us build a new story, which will be important if we one day consider an IPO."
That may be a way off. Meantime, the GSK provides important validation for the young company, and "we'll certainly talk to GSK about any potential assets" that they may want to farm out, Loibner says.
- Melanie Senior (m.senior @elsevier.com)
This article is reprinted from "The Pink Sheet" DAILY –Feb 3, 2010
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