Investment angel group San Diego Tech Coast Angels said this week that it has contributed $289,000 to close an approximately $800,000 Series A financing round for Stanford University spinout Amplyx Pharmaceuticals.
Amplyx, which in December received a $492,000 initial cash infusion from Palo Alto, Calif.-based Life Science Angels, will use the funds to continue proof-of-concept animal studies for a protease inhibitor and antibiotic drug candidate, both of which are based on a platform technology developed at Stanford for improving the ADME properties of existing drugs.
The company is also hoping that positive data from this work will attract venture capital that could help it move the candidates down the pipeline. Amplyx will seek this funding out of its office space in the San Diego area, where it recently relocated to from the Bay Area.
Amplyx co-founder and CEO Andre Marquis this week told BTW that one of the major benefits of his company’s new home was “a more tightly knit investment community.”
The move to San Diego “has been hugely positive for us,” Marquis said. “One of the great things about San Diego is that the network of biotech angels is very tight. For a younger company, it’s a little bit easier to get lost up in the Bay Area.”
Marquis, a serial entrepreneur with experience founding biotech and IT companies, co-founded Amplyx in 2006 with Mitchell Mutz, who has worked as a research scientist both in industry and academia; and Gerald Crabtree, a Howard Hughes Medical Investigator and professor of pathology and developmental biology at the Stanford University School of Medicine.
The company’s platform technology is based on the discovery by Crabtree that a molecule called synthetic ligand for FKBP, or SLF, can be used to chemically and permanently attach a non-toxic small molecule with a long metabolic half-life to other compounds that might not have such desirable ADME properties.
Amplyx aims to use the technology to alter the composition of effective, approved drugs with ADME and/or toxicity issues to create a new, patentable compound with a better safety profile. Approximately 50 percent of marketed drugs have one or more serious ADME problems, Amplyx said.
Basically, the technology “is a way to take existing drugs and essentially attach another drug to them to fix their pharmacokinetic problems — to slow down metabolism by the liver, to slow down clearance by the kidneys,” Marquis said.
Amplyx has negotiated a license with Stanford to five related patents on which Crabtree is named the primary inventor, Marquis said. He declined to disclose further details about Amplyx’s agreement with the university, adding only that it was “a standard biotech license agreement [in that] as we move the molecules forward we have to pay milestones plus royalties.”
“One of the great things about San Diego is that the network of biotech angels is very tight. For a younger company, it’s a little bit easier to get lost up in the Bay Area.”
In December, Bay Area angel investment group Life Sciences Angels made a $492,000 bet on the company. Prior to that, Marquis, Crabtree, and Mutz had been the sole investors.
Marquis said that when Mutz, who is Amplyx’s chief scientific officer, decided to relocate to San Diego for personal reasons, the three co-founders decided that Amplyx would follow suit — which may have been a serendipitous move.
“As part of moving our operations to San Diego, Life Sciences Angels put us in touch with Tech Coast Angels,” Marquis said. TCA member Jack Florio “did a lot of our due diligence, has done a lot of introducing, and helped Mitchell find office space … which has been an advantage; it’s a tight community down there.”
TCA is the largest angel network in the US and the number-one source of startup funding in Southern California, according to the group. Since 1997, it has invested more than $86 million in more than 134 companies and raised more than $812 million of additional capital, mostly from VC firms.
Marquis said that while there are sufficient angel and VC resources in the Bay Area, the network is not as well-defined as it is in San Diego.
Amplyx could afford to move its operations because at the moment it is a virtual company, according to Marquis, who remains in the Bay Area along with Crabtree. Marquis said that the company does not maintain its own lab space, instead outsourcing its proof-of-concept work to undisclosed CROs in the US, India, and China.
“We’re doing this quickly and inexpensively and trying to reduce our fixed costs,” Marquis said. “We don’t have to pay for a lab, which saves investors’ money.”
The company has chosen to target HIV protease inhibitors as its first drug candidate, and is currently testing compounds using the SLF technology in animal models.
“Existing AIDS drugs are metabolized very rapidly, and you actually have to take another drug that essentially blocks metabolism by your liver of everything else,” Marquis said. “That makes you sick, plain and simple, for the rest of your life.” Marquis estimated the protease inhibitor market to be about $3 billion.
In order to attract additional VC funding, Amplyx must show that the SLF-protease inhibitor lasts longer and maintains efficacy in animal models, and is “already quite far down the road” in doing so, Marquis said.
Amplyx is also developing an antibiotic using the SLF technology. Marquis declined to elaborate.
“Once we get up and running and show [proof of concept] of the platform, we can then start applying it to a lot of drug candidates, and that’s when it would make sense to have a lab, and staff it, and test a lot of molecules,” Marquis said. “But right now, because we’re early stage and angel funded, it makes sense not to have that overhead and burn that cash, but focus on the experiments we want to do.”
If the company burns through its angel funding before demonstrating POC and wooing additional investors, partnering with other companies is always an option, and Amplyx has already discussed this possibility with candidate collaborators, Marquis said.
Florio, who is TCA’s lead investor in Amplyx, said in a statement that the firm “has created a unique, simple solution to a huge problem. The company’s platform technology has the potential to improve a large number of drugs, including numerous drugs with billon-dollar markets.”
Marquis added that the SLF technology “is quite a solid foundation for the company, and you just sort of pick the low-hanging fruit of improving existing drugs. That’s very easy to demonstrate, and there is a huge market need.”