Oxyrane UK Ltd. on Nov. 17 raised $26.5 million to advance its portfolio of enzyme replacement therapies (ERTs) to treat rare inherited diseases.The Series D funding was led by new investor Morningside Group, and included Forbion Capital Partners, based in the Netherlands, and existing investor New Science Ventures, a New-York based VC.

Although the five-year old company’s pipeline is still pre-clinical, its technology has the potential to produce more effective ERTs for lysosomal storage disorders and to do so at a significantly lower cost than existing, commercially-available ERTs. The supply disruptions to Genzyme (now Sanofi’s) Gaucher treatment Cerezyme (imiglucerase) and Fabry disease treatment Fabrazyme (agalsidase) illustrated the adverse impact on patients and investors of production shortages around these treatments for often fatal diseases Also see "Sanofi Says Genzyme Integration Is On Track, But Fabrazyme Production Won't Meet Goals" - Pink Sheet, 28 July, 2011.. It also illustrates continuing unmet need in this area, according to Sander Slootweg, managing partner at Forbion, who has joined Oxyrane’s board.

Oxyrane’s technology, which uses the Yarrowia lipolytica yeast, allows the company to produce human lysosomal enzymes that are taken up faster by cells, and are more targeted, than existing commercially-available versions. This is because Oxyrane’s platform can produce enzymes with higher levels of the targeting sugar structure, mannose 6-phosphate, than current versions. Yet these enzymes are still highly similar to the naturally-occurring human enzyme, according to Slootweg.

As such, he summarized, the platform delivers “improvement across the spectrum: better potency, more stability, higher-scale manufacturing and an overall better product.” Thanks to relatively simple batch production processes, Oxyrane believes it can scale up production to as high as 100,000 liters if required, which could “dramatically alter” production economics, according to Forbion.

Other factors also pulled in Oxyrane’s new investors to a round that was oversubscribed, according to Slootweg. The technology could have far broader application, for instance in more efficient antibody production. That opens the door, potentially, to future partnering deals with companies looking for large-scale antibody production capability with relatively short (e.g several-day long) fermentation cycles. Oxyrane’s platform could thus be of interest to those seeking to develop bio-betters that more closely mimic human glycosylation patters, but also to sponsors of biosimilar drugs, where production cost will be a crucial issue in allowing discounted prices ([A#00110919008 ]).

Faster Approval Path For ERT Drugs, Given Supply Issues?

Still, even in the case of the lysosomal storage disorder programs, which is where the platform is likely to be validated first, this is still early-stage: the current fundraising is expected to allow the lead Pompe disease program to advance to the end of Phase I/II and to fund further pre-clinical work on other ERTs. But Slootweg is optimistic that the path to approval could be faster than usual given regulators’ concerns about supply shortages in this area (concerns that, following Genzyme’s problems, significantly benefited competitors such as Shire PLC, whose own Gaucher treatment Vpriv (velaglucerase alfa) was accelerated through the regulatory process).

Predicting smoother or faster paths to approval is a dangerous game. But this syndicated round isn’t huge – it’s about in – line with another recent European Series D, that of AM-Pharma BV, in September 2011, which also included Forbion [See Deal] – and, as Slootweg points out, the limited capital supply resulting from the ongoing economic crisis means that “those [investors] that do have money can command quite favorable deal terms” at least on new investments.

What’s critical, though, is to make sure any such new investments are funded for the long-term, with similarly-minded syndication partners, meaning there’s less reliance on attracting new backers. Forbion had already worked with Morningside and New Science Ventures in immunotherapeutics group BioVex, sold to Amgen Inc. in January 2011 for up to $1 billion in total [See Deal]. “We like to syndicate with parties that are in it for the long-haul.”

But there has to be an exit one day, and there’s little hope of an IPO market anytime soon. So “we validate [our potential investments in the therapeutics space] by calling a series of likely acquirers and asking whether they’d be interested in buying a company with such-and-such a kind of asset or technology in such-and-such a disease area,” noted Slootweg. If they get some interest, that helps validate the deal. And according to Slootweg, those potential acquirers – the pharmaceutical firms— do provide concrete, “quite detailed” feedback. After all, he claimed, “we’re all looking to achieve the same thing; there’s a collaborative spirit.”

Whether or not that spirit will extend to actual money-on-the-table acquisitions, and thus an exit for the likes of Forbion, remains to be seen. But on paper at least, the prospect of cheaper and easier-to-produce drugs for rare diseases, where the likes of Genzyme and Shire have already proven that there’s a viable commercial market even for high-priced products, looks attractive Also see "As Pharma Falters, Shire Specialist Model Hits Sweet Spot" - Pink Sheet, 2 August, 2011..

Aiming For Better, Cheaper ERT Drugs, Oxyrane Raises $26.5 Mil.

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