Human genetics leading the pull of investors into neuro
Human genetics and new modalities converge to lower the risk for neurology start-ups
Human genetics and new modalities converge to lower the risk for neurology start-ups.
The stain of “too high-risk for investment” that plagued neuroscience for years has now worn off, according to a BioCentury analysis of early stage venture investments. Neurology sits second only to cancer for seed and series A funds raised, close to or exceeding $1 billion in each of the last three years.
Rooting therapeutic approaches in human biology, especially genetics, is the primary method for mitigating risk, and the strategy is dictating much of where the money goes.
According to BioCentury’s BCIQ database, neuroscience has ranked second out of 19 therapeutic areas in all but one of the last seven years, behind cancer and ahead of traditionally “hot” areas such as autoimmunity and inflammation.
Neurology started to separate from the pack in 2016, reaching a high of nearly $1.5 billion in 2018 — a peak year in almost all the disease areas.
The pandemic hasn’t slowed momentum; the $907.6 million raised by mid-September is already close to 2019’s full year total of $980.1 million.
Moreover, there’s broad interest. At least 115 firms have participated in seed and series A rounds for neurology companies in the last 12 months.
Much of the money is going to neurodegenerative diseases. Many of the newly funded companies are targeting rare mutations linked to these diseases, or the pathways the mutations reside in. The hope is that the approach will do for neurology what targeted therapies have done for cancer, and serve as a gateway that leads to use in broader populations.
However, Alzheimer’s disease is notably absent from the list of therapies, despite the huge unmet need, the lack of disease-modifying therapy, and the multiple lines of genetic evidence pointing to β amyloid as a disease driver. On Wednesday, the string of disappointments in Alzheimer’s extended to tau, the next major target pharmas are backing, with the first anti-tau antibody to reach Phase II failing to slow cognitive decline (see “The Road Ahead for Tau”).
Also under-represented is neuropsychiatry, despite the stark need in diseases such as depression and schizophrenia. While the genetics have been widely studied and many, often subtle, risk factors identified, the absence of causative mutations makes translating those observations into drug candidates less straightforward.
Rare diseases and genetic subsets lead the way
Many factors are to blame for the clinical failures that have driven pharmas, and many investors, away from neuroscience. These include complex biology, heterogeneous patient populations, difficult drug delivery, subjective clinical metrics and strong placebo effects in certain diseases.
What’s pulling investors back is the progress that’s been made in human genetics and model systems. The discovery of rare disease-causing mutations and the ability to investigate their function in human cell models, particularly those made from patient cells, provide a much stronger rationale for intercepting or modulating a target protein than animal studies alone, especially considering how poorly predictive the animal models have been.
Another draw has been new technologies for accessing CNS targets, such as methods for getting therapies across the blood-brain barrier or targeting select cells and circuits within the brain. Other advances include the ability of new modalities to deliver therapeutic genes and cells, or to attack targets at the RNA level.
Clinical wins in neuro Orphan indications have validated the strategy of choosing a target based on genetics, with antisense therapy Spinraza nusinersen from Biogen Inc. (NASDAQ:BIIB) and gene therapy Zolgensma onasemnogene abeparvovec-xioi from Novartis AG (NYSE:NVS; SIX:NOVN) two of the primary examples. Both are approved to treat spinal muscular atrophy (SMA), a degenerative neuromuscular disease caused by rare mutations in SMN1.
Collectively, the 47 neurology-focused companies that raised seed and series A arounds in the last twelve months disclosed programs in 56 indications, of which nearly half — 46% (26) — are rare diseases or genetically defined subsets of larger diseases.
A decade ago, in the equivalent twelve month period (Sept. 10, 2009 to Sept. 10, 2010), there were 20 neurology start-ups raising seed and series A rounds, working in 21 disclosed indications, with only 10% (2) representing rare or genetically defined diseases.
In the last year, five of the seven diseases that attracted the largest number of early venture rounds were degenerative conditions that are genetically defined or include genetic subsets.
Parkinson’s disease topped the list with seven programs in development by six start-ups that netted at least $172.8 million; two of the companies didn’t disclose the amount they raised.
Three of the companies are tailoring therapies for Parkinson’s patients with GBA mutations. Chamishi Therapeutics and Vanqua Bio were both founded by OrbiMed in 2019 and have Orbimed Venture Partner Jim Sullivan as CEO. Though the details of their approaches aren’t disclosed, the companies are exploring the use of antisense oligonucleotides, and may eventually be merged into a single company, said Sullivan, speaking on a Sept. 17 virtual panel organized by the Rosalind Franklin University. Aspen Neuroscience Inc. is developing an autologous dopamine neuron replacement therapy using induced pluripotent stem (iPS) cells. For patients with GBA mutations, the company is correcting the mutation in the cells ex vivo.
BioCentury’s BCIQ database lists at least two other biotechs targeting GBA, as well as six targeting LRRK2 and 14 targeting α synuclein, two other proteins mutated in rare forms of Parkinson’s (see “Synuclein Pipeline”).
The clinical strategies of the companies highlight two schools of thought. One holds that the best approach is to find a signal first in mutation carriers, where the rationale for addressing the target is strongest, before testing a therapy in the general population. The other believes that when the rationale for the target is strong and it’s complex to run a trial in rare mutation carriers, the best strategy is to go to the general population straight away. For example, most companies targeting LRRK2 and α synuclein are testing their therapies in the general Parkinson’s population, while those targeting GBA are initially selecting for patients with GBA mutations.
The other neurodegenerative diseases being pursued by three or more companies are amyotrophic lateral sclerosis (ALS), frontotemporal dementia (FTD), Huntington disease (HD) and spinocerebellar ataxia (SCA).
Pain and epilepsy are two conditions outside of neurodegeneration that have attracted early-stage investors, with six and four rounds, respectively.
Depression is the sole psychiatric condition that drew more than one seed or series A round in the last twelve months.
The most popular indications in the last 12 months have little overlap with those of 10 years ago, when Alzheimer’s disease and stroke ranked highest.
Though small molecules remain the most common modality, investors have poured over half a billion dollars into cutting edge technologies that cover other modalities, drug delivery technologies and biomarkers.
Antisense oligonucleotides, siRNA, gene and cell therapies represent 10 of the companies and 29.7% of the money raised. Beyond those, two companies — Redpin Therapeutics Inc. and Coda Biotherapeutics Inc. — received funding to develop chemogenetic platforms, and three others — Limbix, Karuna Labs Inc. and WinterLight Labs Inc. — for digital therapeutics or biomarkers.
Chemogenetics aims to solve a challenge in virtually all brain diseases — how to control, at will, the activity of specific cell types in select neural circuits. The approach is sophisticated, involving the combination of a gene therapy encoding an ion channel, targeted to certain cell types in a brain region of interest, with a small molecule that can activate the channel. The channel itself can be either excitatory or inhibitory. Withdrawing the small molecule should turn off the therapy (see “Redpin Debuts”).
Digital therapeutics remain a small but growing segment of drug development. In last year’s Back to School package, BioCentury discussed the dawn of digital therapeutics and outlined principles for drafting rules of the road for digital health (see “Digital Health: Rules of the Road”).
Both Limbix and Karuna are using virtual reality to treat disease; Limbix is focusing on depression in adolescents and Karuna on chronic pain (see “A Virtual Treatment for the Reality of Depression”). WinterLight, a graduate of Johnson & Johnson’s JLABs incubator in Toronto, is using speech analysis to detect cognitive changes in Alzheimer’s disease, frontotemporal dementia (FTD) and depression (see “Digital Makes its Mark on Cognition”).
Investor who’s who
A wide range of venture investors contributed to the seed and series A rounds over the last 12 months, with 94 (81.7%) of the 115 firms that invested participating in a single financing.
Alexandria Venture Investments participated in the greatest number of financings, at six rounds; it was not the lead investor on any of them.
OrbiMed is second with four seed or series A rounds in three neurology-focused companies. OrbiMed participated in both Aspen Neuroscience’s $6.5 million seed and $70 million series A financings, leading the latter.
Atlas Venture, MPM Capital aand Partners Innovation Fund each participated in three rounds. MPM was a lead investor in all three of its financings — Biointervene Inc., Coda Biotherapeutics Inc. and Triplet Therapeutics Inc. Versant Ventures and MPM co-led Coda’s seed and series A, and Triplet’s $49 million series A was co-led by Pfizer Ventures.
Versant also participated in two neurology startups that narrowly fell outside the criteria of the search. It participated in Passage Bio Inc.’s $115.5 million series A round in February 2019 that was led by OrbiMed, and a $110 million series B round seven months later led by Access Biotechnology. The company raised $248.4 million in an IPO in February 2020. Versant also participated in the $30 million series B round for preclinical regenerative medicine play Pipeline Therapeutics Inc., the company’s first disclosed venture round.
GBA (GCase) – Glucosylceramidase β
LRRK2 - Leucine-rich repeat kinase 2
SNCA – α synuclein
SMN1 – Survival of motor neuron 1 telomeric