ELCELYX THERAPEUTICS
CEO: Alain Baron
Revenue: Not disclosed
No. of local employees: 8
Investors: Sailing Capital, Morganthaler Ventures, Kleiner Perkins Caufield & Byers, Technology Partners, and GSM Fund.
Headquarters: Del Mar Heights/Carmel Valley
Year founded: 2009
Company description: Pharmaceutical company developing a new formulation of a popular diabetes drug for targeted subpopulations
Key factors for success: Funded, experienced executive team, safety-advantaged program
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Elcelyx Therapeutics has raised $40 million in a Series E financing to drive its lead drug candidate — a tweaked formulation of a popular diabetes medication — to market.
Introduced more than 50 years ago, metformin is the most widely prescribed diabetes treatment in the world, recommended by the American Diabetes Association as a first option for patients with type 2 diabetes. Despite metformin’s ubiquity and effectiveness, about 40 percent of type 2 diabetics don’t take the drug, according to Elcelyx’s CEO, Dr. Alain Baron.
Patients with poor kidney function, for example, have to avoid the drug, as renal impairment could result in a dangerous excess of metformin in the blood. Many patients also experience gastrointestinal intolerance due to the drug being partially released in the stomach before it passes through the patient’s system.
With those patients in mind, the company crafted a delayed-release version of the drug, designed to improve blood sugar levels while limiting how much of the drug reaches the stomach or bloodstream. Rather than releasing in the stomach first, the release is delayed until the drug reaches the bowel. This makes it a viable option for diabetics with renal impairment and GI intolerance.
Low-Cost and High Reward
Elcelyx’s oral treatment, dubbed Metformin DR, not only meets the needs of a large population of diabetics, but it’s also a relatively low-cost/high-reward investment.
By targeting this subpopulation of patients, Elcelyx has avoided the costly and time-consuming safety trials required for drugs that treat diabetes.
“Chronic diseases affect tens of millions of people, so the FDA’s tolerance for high-risk drugs is very low,” Baron said. “With cancer, you can tolerate extreme side effects because the other side is death. With diabetes, many people believe it can be controlled by diet and exercise, so we needed a target that would be safety advantaged.”
Both preclinical and safety data is already available for metformin, so Elcelyx only needs to show data that supports its claim that the company’s delayed-release version of the drug is a viable option for these subpopulations.
Metformin DR is now in a Phase 2b trial, and Elcelyx is enrolling roughly 550 patients to find the ideal dose for a pair of Phase 3 studies planned thereafter. Assuming the drug application is filed with the FDA by 2018, Baron said he expects regulatory approval by 2019.
If approved, it is hoped the drug could treat the 8 million diabetes patients with renal impairment or GI intolerance.
VC Experience
The company’s $40 million round, led by well-heeled Hong Kong private equity firm Sailing Capital, will pay Metformin DR’s next trial, Baron said.
Elcelyx is no stranger to venture capital, and neither is Baron. The company’s chief executive is a current venture partner at Lightstone Ventures and held the role of entrepreneur-in-residence at its predecessor firm, Morganthaler Ventures. Baron’s experience and connections in venture capital have contributed to Elcelyx securing about $97 million since the company’s founding in 2009. Investors include Morganthaler Ventures, Clough Capital Partners, Kleiner Perkins Caufield & Byers, Technology Partners, and GSM Fund.
Management A-Team
A glance at Elcelyx’s management team makes it clear the company’s clout with investors goes beyond the drug’s potential and Baron’s connections. The staff is made up of executive and managerial veterans of the highly regarded Amylin Pharmaceuticals, a San Diego startup that was sold to Bristol Myers Squibb for $7 billion in 2012.
“We have a lot of very talented individuals, and there’s a lot of trust because we’ve worked closely together for many years,” Baron said.
The company may seek additional capital to continue development by taking the company public, acquiring more private capital or considering a merger or acquisition, Baron said.
“The drug needs to be commercialized by a large primary care sales force, so we will be looking for a commercial partner on the other side of this Phase 2b trial,” Baron said.