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NKT Thera Closes $8M VC Round to Develop Rxs Based on NK Cell IP from Boston Institutions

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NKT Therapeutics, a company developing treatments for inflammatory disease based on IP licensed from a trio of Harvard Medical School-affiliated research hospitals, said this week that it has closed an $8 million Series A financing round to progress an early-stage pipeline of therapeutic antibodies targeting natural killer cells.

NKT has licensed an intellectual property portfolio from Beth Israel Deaconess Medical Center, Dana-Farber Cancer Institute, and Massachusetts General Hospital. As part of the deal, each of the Harvard Med-affiliated institutes has been awarded an undisclosed equity stake in the company.

Co-leading the $8 million financing round was SV Life Sciences, a venture capital firm with offices in Boston, San Francisco, and London; and MedImmune Ventures, the venture arm of AstraZeneca subsidiary MedImmune, which invests in companies developing technology that mesh with MedImmune's own therapeutic pipeline.

The licensed IP is based on research conducted by scientific co-founders Steven Balk, associate professor of oncology at Beth Israel; Brian Wilson, assistant professor of medicine at the MGH diabetes unit; and Mark Exley, assistant professor of medicine in the immunology division at Beth Israel. All three are faculty members of Harvard Medical.

Balk, Wilson, and Exley are longtime collaborators who researched the role that NK cells play in regulating the body's immune response in a number of conditions, including asthma, cancer, infectious disease, and autoimmune disease.

Working with their respective institutions' tech-transfer offices, Balk, Wilson, and Exley developed IP surrounding monoclonal and polyclonal antibodies specific for NK cells and other T-cell subpopulations, and decided to form a company to capitalize on their findings.

Michael Ross, managing partner at SVLS, told BTW this week that his firm had been interested in NK cells for several years and had looked at investing in technology from several academic laboratories. In the end, the combined expertise and initiative of the three co-founders was particularly attractive, he said.

"We came across these founders, and really liked the stories of these individuals," Ross said. "They had already decided to work together and put the beginnings of the company together, and they had a tiny amount of seed money. We worked with them to put together the licensing deal."

Stan Mah, a senior associate in the Beth Israel Technology Ventures Office, said that the IP consists of a pair of patents: one that is solely assigned to Beth Israel and one that is co-assigned to the trio of institutions. Thus, Beth Israel took the lead in negotiating with NKT and its investors.

"Researchers here collaborate with researchers all over Boston and the rest of the country, and very frequently there are inventions made at multiple institutions, and co-ownership happens all the time," Mah told BTW.

"Typically, when academic tech-transfer offices have co-owned IP, the offices discuss which will take the lead in marketing and negotiating," he added. "This is often done on a case-by-case basis – where the research was done, who was the lead on the project."

In this case, Beth Israel, Dana-Farber, and Mass General inked a formal inter-institutional agreement before initiating negotiations with NKT and spelling out how patent costs, potential royalties, and other financial concerns would be shared.

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Mah declined to provide details on the specific IIA between the institutions. Robert Mashal, who was brought in by SV Life Sciences to serve as president and CEO of NKT, told BTW that the prior IIA helped speed what would have otherwise been extremely complicated negotiations.

"It's always easier to deal with a single institution rather than multiple institutions," Mashal said. "Everybody worked toward something that would work for the company. When Beth Israel and NKT reached an agreement, we shared what we had with Mass General and Dana-Farber. We had worked out how the institutions would be compensated, and the institutions decided how that would be split between the three of them. We just said here's the equity and terms of the licensing deal."

Mashal declined to disclose whether the institutions' equity stake is in lieu of an upfront payment, and he declined to discuss other provisions of the licensing deal.

"Often in universities it involves some sort of compensation for IP spending to date," Mashal said. "They may or may not involve upfront payments, they often involve milestones, and often involve royalties. We were rapidly able to come to agreement about what makes sense for the company and institutions."

SV Life Sciences also brought MedImmune Ventures in on the deal, and their involvement was "a pretty big vote of confidence for us," SV's Ross said. "MedImmune has pretty deep diligence and scientific ties into folks that understand the biology," he added.

For its part, MedImmune Ventures has also been eyeing NK cells as a potential therapeutic target as both MedImmune and parent AstraZeneca have existing therapeutic programs in all of the potential NK indications, including cancer, auto-immune disease, asthma, inflammation, and diabetes.

"This is a novel therapeutic target, and although there is a lot of basic academic science behind it, no one has gone after this target of T-cells yet therapeutically," Joe Amprey, senior managing director of MedImmune Ventures, told BTW.

"Another attribute that makes this an interesting investment is that because of the antibody they have, they can very quickly generate in vivo data that will give us hints about the clinical potential of this target," Amprey added. "In less than two years we'll have a very good sense of how well this target can play in ameliorating disease."

MedImmune Ventures' backing of NKT is a straightforward capital investment and does not contain a provision granting MedImmune access to technology developments. MedImmune Ventures was founded in 2002 as a wholly owned VC subsidiary of MedImmune to leverage the biotech firm's research and development expertise and its financial resources.

As such, Amprey said, it "plays as much like a VC as we can. We should be seen as a venture investor with a lot of deep domain expertise to move this forward. We won't ask for any options, but we will ask for some interactions with NKT scientists in the future. For instance, if they have questions about clinical strategy, we'd be willing to allow to them to interact with our IND folks."

Neither MedImmune Ventures nor SV Life Sciences were willing to disclose their respective contributions to the $8 million VC round. Amprey only said that MedImmune Ventures was a "significant" investor. As a result of the firms' investment, both Amprey and Ross have joined NKT's board (see People Transfer, this issue).

NKT may also have additional academic deals up its sleeve. Mashal said that the company is planning a number of therapeutic programs beyond the lead indication of asthma that will combine IP that it has licensed with IP that it plans to develop in house.

"That said, every company is always looking for IP that can bolster its portfolio," Mashal said. "If we can find IP that's the right price and right fit, we will be aggressively going after it."

And as the company is currently "virtual," and without dedicated laboratory space, it will likely rely on partners – both past and future – to conduct research, Mashal said. "We have entered into a number of research agreements, and are negotiating others, and it includes academic institutions from whom we have licensed IP; institutions from whom we haven't licensed; and CROs," he said.

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