GlaxoSmithKline PLC has now put into place the third prong of its strategy to become a leader in the bioelectric medicine and technology space with the inception of a $50 million venture capital fund that will give a “jump start” to entrepreneurs in the field.

The fund, dubbed Action Potential Venture Capital, has a clear mission to invest in five to seven start-ups that are making progress in the field of bioelectrical medicine. Like other venture funds, APVC is looking to deliver financial returns on its investments in the traditional venture time horizons of five to 10 years, said Imran Eba, newly appointed head of the fund and currently its only employee. Eba expects to add one to two other employees within the next six months.

The investment by the fund does not give GSK any preferential rights to the technology or the company; similar to that of other corporate venture arms.

While the fund will not focus on any specific therapeutic area, it will concentrate on science that affects the peripheral nervous system and could have implications in disorders as diverse as inflammatory bowel disease or rheumatoid arthritis; respiratory diseases such as asthma and COPD and metabolic diseases including Type 2 diabetes.

APVC made its first investment on Aug. 8 in Valencia, Calif.-based biotech SetPoint Medical Corp., joining the company’s Series C round. APVC joins Covidien Ventures, Boston Scientific Corp. and previous investors, Morgenthaler Ventures, Foundation Medical Partners and Topspin Partners. The Series C brought in $27 million, adding to the $19 million the company has raised since its inception in 2007.

SetPoint expects the funds to last the company three years and allow it to bring its first product to the point of approval in Europe. What sets the start-up apart from other investments GSK has made is that it’s a device company that specializes in bioelectrical neuromodulation. SetPoint has developed a small cylindrical device -- approximately 8mm by 25 mm – that would be implanted in the neck near the vagus nerve and that is programmed via an iPad app that would regulate bioelectrical impulses. The device is being studied as a treatment for both rheumatoid arthritis and Crohn’s disease.

The device is based on the idea that the immune response can be triggered by stimulating the nervous system – what the company calls the inflammatory reflex. The work comes out of the lab of Kevin Tracey, president and CEO of the Feinstein Institute for Medical Research and a specialist in neural control of the immune system, also the founder of SetPoint.

According to SetPoint CEO Anthony Arnold, the company will seek regulatory approval in Europe first before going to FDA because the regulatory climate is more hospitable. He expects it will be about five years before the device is approved and has gained full reimbursement. While the device has only been tested in a few patients so far, SetPoint expects that the only complications will be the typical risks seen with any implantation surgery.

The SetPoint device will go up against some of the best-selling drugs in the world, including AbbVie Inc.’s Humira (adalimumab) and Amgen Inc.’s Enbrel (etanercept). While the company does not believe that it will displace the blockbusters as treatments for inflammatory diseases, SetPoint predicts there will be a strong market for the product once patients realize the device stimulates the natural immune response and would not have the side effects of these drugs.

“We don’t expect to take down Humira or Enbrel,” said Arnold, “but it’s a $30 billion market and even a single-digit share of that would be worthwhile.”

A Three-Pronged Approach

For GSK, APVC is the final initiative in an effort to bring rapidly changing science and technology together. Eba said the company sees itself as a sort of integrator – bringing the biology know-how and the technology together.

The British pharma leapt into the emerging medical field with the formation of its Bioelectronics R&D unit in 2012, an endeavor that was two years in the making. The mission of the unit is to bring together academics that are working in the field and allow them to share knowledge. It is not considered one of GSK’s Drug Performance Units (DPU) Also see "GSK's "Biotech-In-A-Pharma" R&D Model Makes Progress" - Pink Sheet, 29 November, 2010..

The unit, which is run by Kristoffer Famm out of the company’s London office, is funding an Innovation prize – the other prong of the approach Also see "With Academic Funding, GSK Looks to Zap Life Into Electroceuticals" - Pink Sheet, 10 April, 2013.. At the end of 2013, GSK expects to convene a meeting and ask researchers to crowdsource a problem in neural signaling – a key hurdle the field needs to overcome; GSK will then put up $1 million as a prize to the group that solves the problem. A deeper understanding of neural signaling mechanisms will benefit other therapeutic initiatives at GSK.

Eba was unable to comment on GSK’s ultimate intentions, but said the company is not looking to become a device maker in the vein of Johnson & Johnson or Medtronic PLC, but sees these efforts as an extension of its pharmaceutical activities. The company see promise in the technology, but is likely to wait and see what emerges before making a larger investment like a licensing deal or acquisition. Should this three-pronged effort prove out, he expects GSK may apply it to other emerging technologies.

GSK Ventures Into The Device World Through Bioelectronic Investment

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