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RNAi Drug Delivery Startup Solstice Closes $18M Series A Financing Round

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Less than a year after Traversa Therapeutics declared bankruptcy, the company's founders are making another run at the RNAi drugs space in the form of startup Solstice Biologics, which announced this week that it has raised $18 million in a Series A round of financing.

The investment was from venture capital firms VenBio and Aeris Capital, and is tranched, VenBio managing director and Solstice executive chairman Corey Goodman told Gene Silencing News. Solstice will initially receive $10.5 million, and the remaining $7.5 million will be paid out over the next year and a half based on the achievement of certain scientific milestones.

The money is expected to fund Solstice for up to three years, during which time it aims to refine its core RNAi delivery technology, dubbed ribonucleic neutrals, or RNNs, and conduct proof-of-concept animal studies, he said. The company also expects to expand its team from its current six employees to about a dozen over the coming months as it continues to outfit its San Diego-based laboratory.

Should things work out, Goodman said that the Series A might be enough for Solstice to generate initial phase I data showing that RNNs are safe and well tolerated, and can be used to knock down a clinically relevant target.

“If we can get there, we will have achieved a lot,” he said. “Right now, the business is not to become a pharmaceutical company that takes things from start to finish … [but] for this to be a technology-driven company that will license and sell the technology to bigger companies for their specific projects.”

That's not to say that Solstice has ruled out the possibility of in-house drug programs some time down the road. But for now, the firm aims to stay capital efficient, Goodman noted. “We'll see how things mature as time goes on.”

In the meantime, Solstice plans to operate in a sort of stealth mode, focusing on refining RNNs for tissues and cell types for which it is most amenable.

While the ultimate goal is to make the technology as broadly applicable as possible, “things are going to come in steps,” Goodman explained. As it stands, RNNs appear best suited for delivering payloads to skin, lung, and blood, but only animal testing will bear this out.

“If the technology works, the sky is the limit,” he said. But “right now, we need to simply let the mouse tell us where it works today.”

RNNs were developed by Traversa co-founder and University of California, San Diego, researcher Steve Dowdy. The exact details of the technology remain under wraps, Goodman said, because there are others working in the same area and Solstice wants to maintain a competitive lead. However, he said that RNNs are completely novel from anything Traversa was working on and that relevant patent applications are not yet publicly available.

While Solstice has licensed a variety of post-Traversa Dowdy's inventions, including ones covered by published patents and applications, “they are not what I'm investing in. What I'm investing in … is [intellectual property] that just got filed last summer” and has not been published, Goodman said.

Who You Know

In taking part in Solstice, Goodman is returning to familiar territory. He left academia in 2001 to help found and run a handful of small biotechs, and in 2007 joined Pfizer as head of its biotherapeutics and bioinnovation center, which oversaw the company's oligonucleotide therapeutics operations.

During his time at Pfizer, Goodman, along with oligo drug veteran Art Krieg, reviewed numerous RNAi delivery strategies, some developed in-house and others by would-be collaborators, but they all fell short, he said.

After he left Pfizer and joined VenBio, he kept his eye on the RNAi space. So when Curt Bradshaw, Traversa's former CSO who had worked with Goodman at Pfizer, contacted him about a year ago to pitch the RNN technology with Dowdy, his curiosity was piqued.

“I assumed I was going to see [another] project that wasn't going to work,” Goodman said, noting that he was aware of Traversa's failure with its own drug-delivery technology (GSN 5/31/2012). “But right away I saw something different than anything I'd ever seen before. They were talking about a pro-drug approach rather than some big liposome.”

According to Goodman, the RNNs involve “side groups for the nucleic acids” that keep them stable in plasma and “look very neutral and biocompatible.

“Because it's neutral, [an RNN] can pass across membranes and when it gets inside [a cell], a ubiquitous enzyme will chew off those side groups” completely, at which point the payload triggers the RNAi mechanism, he said, declining to offer additional details.

Goodman said he questioned Bradshaw and Dowdy about the technology during their initial meeting, and later vetted the approach with VenBio colleagues and experts in the field, and was encouraged by what he saw.

“It works in every mammalian cell line, even primary cells, in culture, and it seems like it works in animals,” he said. “I can't promise this will be a human therapeutic … [but] I've probed really hard and can't find any obvious mistakes. It's plenty risky, but we think there is a chance this might work.”

Should the RNN technology not pan out as expected, Goodman said that he doesn't expect a complete loss on the Series A investment since it could likely find applications as a research reagent.

“The upside is … the moonshot,” he said. “There is the potential to have a big impact on human health, and a big impact on shareholder value.

“It's a big idea, and I think it's worth a shot,” he added.

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