Drug delivery co Chiasma raises $38.5m

This is the largest amount raised by an Israeli life sciences company since 2010.

Sources inform ''Globes'' that Chiasma Ltd., which is developing oral alternatives to intravenous drugs, has raised $38.5 million. Abingworth led the new round, joined by current investors, US and European funds MPM Capital, Arch Venture Partners, F3 Ventures, and 7 Med Health Ventures LP.

The financing round makes the drug development company the local record holder in securing financing in recent years. This is the largest amount raised by an Israeli life sciences company since 2010. The fundraising comes just a year after the company raised $21 million, and brings the total amount raised to $91 million.

Chiasma is in the final stage of clinical trials of Octreolin, for the treatment of acromegaly, a hormonal disorder that results from an excess of growth hormone. People suffering from the disorder grow exceptionally tall, but suffer from a range of health problems. The study is scheduled for completion in mid-2013.

Chiasma has had a hard time to reach its present place. Founded in 2002, the company is headquartered in Jerusalem's Har Hotzvim high tech park. After raising $44 million in 2006, the scale-up of its product from the laboratory to commercial production failed. As a result, it received only part of the funding and was forced to restructure. The restructuring included the bringing in of Fredric Price as chairman and CEO. He previously held several top positions in the life sciences industry, including chairman of Omrix Pharmaceuticals and BioMarin Pharmaceutical Inc. (Nasdaq: BMRN). Together with Chiasma COO Dr. Roni Mamluk, who invented the company's technology, the company changed its technology and business model and embarked on a new road.

Chiasma has developed a unique drug delivery method through the intestines for drugs that do not mix well in the bloodstream when given orally, and are therefore delivered intravenously. The company developed Transient Permeability Enhancer, a coating that protects the molecule from breaking down in the digestive system, while simultaneously acting on the intestine walls to induce permeation of the cargo drug molecules, so they enter the bloodstream. The technology has many possible applications. The company chose acromegaly because of the clear inconvenience of injecting drugs for treating it.

The current treatment for acromegaly is injected into the muscle once a month. The substance is extremely viscous and the needle is therefore thick and the injection is painful, lasting several minutes and leaving the site swollen and aching for days. Expertise is needed to give the injection, which is only administered at hospitals. A once-daily oral dosage, if effective, will save patients from the injections and dependence on hospitals.

The FDA is already familiar with the active pharmaceutical ingredient, which is why Chiasma went immediately from the safety Stage I clinical trial to the efficacy Stage III clinical trial, skipping the preliminary efficacy Stage II clinical trial. While this saves time and money, it means the first results of the oral drug on humans will only be known at the Stage III trial. "We already know that the drug works," Price told "Globes". "If our method gets it into the bloodstream, we have a product."

The acromegaly treatment market is estimated at $500 million a year. Chiasma has orphan drug status for Octreolin, which gives the company fast-track regulatory procedures and seven years marketing exclusivity, even if its patents expire. The drug is also indicated for neuroendocrine tumors, a market which the company estimates at $600 million a year.

"Globes": Do you have competitors in the field?

Price: "There was another company called Endo, which developed an implant that was supposed to release the API through the patient's body over six month, but the product was abandoned for regulatory reasons. The regulators demanded a very long development program to prove the product."

Chiasma has a second small molecule for the treatment of chronic kidney disease, but the company has not disclosed its nature. Most of the capital raised in the present round will finance the completion of the Octreolin trial and registering the drug, and for the start of a trial for the kidney treatment. Other uses will be considered afterwards.

Are you still an Israeli company?

"We're an American company, most of whose employees 48 are in Israel. The fact that we're an American company will be important if we want raise public money in the US."

Abingworth venture partner Vincent Miles will join Chiasma's board. This is the fund's first investment in an Israeli company. He told "Globes", "This is a very professional company. The way they approached the technological development and chose an indication, and their approach to the clinical trials demonstrates that this is a company with a clear picture of its goal and how to reach it."

Published by Globes [online], Israel business news - www.globes-online.com - on July 23, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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