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UC-Davis Spinout Arete Begins Phase II Trials for Diabetes Rx with Entomology Underpinnings

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A diabetes drug candidate that got its start in an entomology lab at the University of California, Davis, has taken another step toward commercialization.

Arete Therapeutics, which spun out of UC Davis earlier this decade to develop drug candidates based on discoveries by entomology professor Bruce Hammock, said last month that it has commenced Phase II clinical trials for the compound, an oral inhibitor of an enzyme that metabolizes a key signaling molecule implicated in diabetes.

If the drug were to reach market – which would likely happen through a partnership with a pharmaceutical firm – UC Davis stands to receive a "modest" royalty based on sales of the drug as part of an exclusive licensing agreement it signed with Arete, company President and CEO James Sabry told BTW this week.

In addition to the royalty, whose rate Sabry declined to disclose, Arete has paid UC-Davis an undisclosed upfront payment for the intellectual property on which the drug is based, and has agreed to make milestone payments based on the drug's development. The triggering events and amounts of those milestones are also confidential.

"We have an exclusive license around a whole host of things that we've in-licensed from UC-Davis," Sabry said. "That forms an IP foundation, but Arete has built on that. We have since filed many tens of patents ourselves as we have taken that early-stage compound and developed it."

The compound, called AR9281, inhibits an enzyme called soluble epoxide hydrolase, or s-EH, which is involved in metabolizing arachidonic acid, a key signaling molecule implicated in diabetes, hypertension, and inflammation.

The arachidonic acid pathway is well characterized, and serves as the target pathway for a number of other non-steroidal anti-inflammatories, including aspirin, ibuprofen, Vioxx, Singulair, and Celebrex.

According to Sabry, there are three known pathways through which arachidonic acid operates. Two of them serve as the basis for the aforementioned drugs, and the third is owned by Arete.

Sabry said that Arete believes its drug candidate may be useful in treating a variety of diseases and conditions, including heart disease and brain injury. "But we are taking the approach toward what we think is the most important," which is type II diabetes brought on by factors such as obesity and hypertension, he said.

"These are extremely common clinical conditions, and one of two major trends – the other being aging – that the pharmaceutical and medical industry must deal with," Sabry said. He added that Arete's license covers all therapeutic indications.

Society's 'Serious Problem'

UC Davis' Hammock and a colleague first discovered the s-EH enzyme targeted by the drug three decades ago while researching fundamental insect biology.

According to UC Davis, Hammock was originally interested in manipulating the pathway regulating insect larvae development, but came to believe that it also might be a therapeutic target. Eventually he discovered molecules that inhibit the enzymes in animals.

This, in turn, provided a proof-of-concept tool, which led him and his son, also named Bruce, to found Arete in 2002 to further develop candidate compounds and move them into clinical trials.

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As part of its founding, Arete licensed from UC Davis patents and know-how surrounding a chemical scaffold for potential compounds, the s-EH target, and the biology around it. Sabry called it a "fairly typical" licensing agreement.

"In my career I've executed many agreements with UC, and there is nothing unusual about this one," Sabry said. "They weren't drug candidates. Arete looked at an initial chemical scaffold that [Hammock] designed, and made thousands of compounds and eventually optimized AR9281."

In a statement, Hammock commented that "finding resources in an academic laboratory to move a first-in-class drug through clinical trials is difficult. Publicly funded research results in new possible pharmaceutical targets that could be exploited by either small molecule drugs or biotechnology.

"However, society faces a serious problem in that few of these leads are followed, and there is a widely held view that universities cannot validate a target, much less optimize a pharmaceutical," Hammock added.

Echoing those thoughts, Sabry told BTW that universities such as UC-Davis "don't have the know-how or interest to develop drugs themselves, but are the places where new biology is discovered. That kind of work isn't being done much at pharma companies much anymore."

Through Hammock's work, he added, Arete "now understands what s-EH does, and has some sense of the clinical applications."

In a Phase I trial last year, Arete showed that AR9281 was safe and well-tolerated in normal, healthy volunteers. It also demonstrated that the compound could reduce atherosclerosis in obese mice.

Arete began enrolling patients for Phase IIa clinical trials for AR9281 in January at 25 centers in the US, Sabry said. The double-blind, placebo-controlled trial is studying the drug over 28 days in 150 patients with impaired glucose tolerance, mild obesity, and mild-to-moderate hypertension. It will be the first time the drug is tested in patients. Arete said it expects results by the first quarter of 2010.

Should the results be positive, Arete will likely look to partner with a larger pharmaceutical company to take AR9281 over prior to Phase III trials, Sabry said.

Thus far the company has raised more than $51 million in Series A funding led by Frazier Healthcare Ventures, Alta Partners, Three Arch Partners, Burrill and Company, and Altitude Life Sciences to support the clinical trials (see BTW, 5/29/2007).

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