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DanioLabs Snares 3.2M in VC Funding; Hopes to Take Drug-Discovery Business to Next Level

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DanioLabs, a Cambridge, UK-based drug-discovery firm, said last week that it has closed its first institutional financing round, raising a total of £3.2 million ($6 million).

The financing round was led by Cambridge Gateway Fund, and supported by other institutional investors including Merifin and NVM. In addition, a number of existing and new angel investors contributed to the fundraising, DanioLabs said.

The cash, according to COO Derek Jones, will support a two-pronged business plan: To shore up DanioLabs’ in vivo zebrafish drug-discovery technology and services, which it sells to larger pharmas and biotechs; and to nurture its own fledgling drug-discovery business.

“This money is to take the company to the next point, which is to build up a good revenue stream, which we’re doing with a number of big pharmas and biotechs,” Jones told Inside Bioassays last week.

“Also, it’s so we can take some of the compounds we’re identifying for ourselves a little bit more through the development process,” he added. “Then we will take those compounds, for which we’ve filed some IP for their use, and we will outlicense those at a point which we feel there is some value. We’re already in discussion with a number of pharmas who are interested in what we’ve found, as well as the approach to finding new compounds.”

DanioLabs was spun out of the department of anatomy at Cambridge University in 2002. It was originally funded with a mixture of money from the Wellcome Trust and some area angel investors, Jones said.

“This most recent [financing] isn’t the first time that we’ve raised money, but it’s the first time that we’ve had some institutions on board who have some deep pockets,” Jones said. “It is like a round A, because the previous funding we had was for the infrastructure, and to get people on board and start to build.”

The company started as a collaboration between Paul Goldsmith, a neurologist at Addenbrooke’s Hospital in Cambridge; Bill Harris, a professor in the department of anatomy at Cambridge University; and Herwig Baier in the department of physiology at the University of California, San Francisco.

DanioLabs’ approach is what the company calls high-content biological systems screening. The high-content tag may be debatable, but DanioLabs does achieve a macro-level systems biology approach to drug discovery by using in vivo zebrafish assays.

“We’ve avoided the term high-throughput, because people consider that to be, ‘Oh, you’re going to do 10,000 compounds,’” Jones said. “We don’t do that, but we can do hundreds or thousands of compounds.

“What we mean by high-content is the amount of information you can get per assay … the number of things we can identify by looking at the effects of compounds on zebrafish,” he added. “We can look at a [compound’s] effect on inflammation; on TNF-alpha; histology; gut motility. It’s not an ideal term, but we start with high-content because people have a better sense of it than high-throughput.”

DanioLabs is not the first company to use zebrafish as a model organism in drug-screening assays. Other recent examples include Cambridge, Mass.-based Phylonix, which has garnered several grants over the past few years from the NIH to further develop its zebrafish assays for processes such as apoptosis, toxicity screening, and angiogenesis (see Inside Bioassays, 7/20/2004); and Atlanta-based Zygogen. In addition, a number of drug-discovery outfits have adopted zebrafish as part of a larger drug-screening campaign.

Zebrafish combine many of the advantages of cells — small, easy to propagate, and relatively transparent — with that of larger organisms such as rodents. Because it is an intact, living organism, researchers can investigate the overall systemic effect a drug may have.

However, because it does not provide the same level of detail on specific pathways as a cellular assay, it has often been relegated to very specific stages in the drug-screening process. But DanioLabs and others are beginning to accept its use in other areas.

“When people think of zebrafish, they tend to think about target validation and genomics, and that’s a small part of what we do,” Jones said. “But more so, we look at where there are needs for disease models that are currently pretty standard in rodents, and ask if we can replicate those in a zebrafish.

“They’re not necessarily genetic models,” he added. “For some diseases, like Huntington’s, Alzheimer’s, and Parkinson’s, you have to create genetic models of them. But others might just be behavioral models, or they might just be chemically induced disease models.”

Other areas in which DanioLabs has a therapeutic discovery program include osteoporosis, epilepsy, ophthalmic disease, and addiction. Jones said that the latter two therapeutic areas are particularly promising.

“In neurological disease, and ophthalmic disease [like] macular degeneration, rodents are not good models,” Jones said. “They do not have the same retinal system as we do. Interestingly, we share a very similar retinal system to zebrafish, so they’re fabulous for this.

“And if you’re doing some sort of disease modeling on addiction, having a cell-based assay tells you nothing,” he added. “Wherever there’s behavior or pain, a cell-based assay tells you nothing.”

Despite the promise of its own therapeutic discovery, DanioLabs will first and foremost focus on cultivating partnerships with pharma and biotech. In the past year, it has announced service or licensing partnerships with companies such as Japanese pharma Sosei, US drug-discovery firm CombinatoRx, and French biotech Proskelia (now a part of ProStrakan).

“You can see how people at CombinatoRx would find this interesting,” Jones said. “Their business is to look for combination therapies, and if you want an in vivo result for combination therapies, what better way is there to approach it than using zebrafish?”

DanioLabs’ task now is to convince others — particularly those in top-10 pharma. In fact, DanioLabs’ systems-biology approach may work well in similar situations, in which proprietary compounds originally intended for specific therapeutic areas have been left for dead due to pre-clinical failures.

“We know that big pharmas are probably sitting on some very valuable compounds, but they’ve been abandoned from their original endpoint for whatever reason,” Jones said. “And for us to get our hands on some of those compounds, and get some in vivo data for them in a cost-effective way — that would be a fantastic thing to be able to tap into.”

— BB

 

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