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Keep An Eye On Them: 5 Promising European Biotech Companies

This report provides an analysis of five biopharmaceutical companies, selected from a pool of 67 European start-ups, having at least one therapeutic in clinical development and with less than five years since their foundation.

Affiris GmbH: the Alzheimer's vaccine

Year of Foundation: 2003

Registered Office: Campus Vienna Biocenter 2 Viehmarktgasse 2A - Vienna, 1030 - Austria

Business Model: R and D

Sector: Biotechnology

Subsector: Nervous System

Management: Walter Schmidt, PhD (CEO); Richard Westmoreland (CFO); Frank Mattner, PhD (CSO)

Web site: www.affiris.com

Pipeline: Affitope AD-01 / Central Nervous System / Phase I

Investors: Mig Verwaltungs AG (major investor); Austria Wirtschaftsservice Gesellschaft mbH (AWS); Österreichische Forschungsförderungsgesellschaft (FFG); Wirtschaftsförderungsfond (WWFF); Zentrum für Innovation und Technologie (ZIT); Prof. Dr. Max L. Birnstiel (Business Angel)

In the area of vaccine technologies the Austrian based Biotech Company AFFiRiS develops an innovative approach for the design of vaccine-based therapeutics to treat severe and life threatening diseases such as Alzheimer's disease (AD) and Atherosclerosis. Awarded in November 2007 of a European patent for the Alzheimer's vaccine, Affiris has secured exclusive rights to develop its vaccine.

AD is a chronic and progressive neurodegenerative disorder that causes an irreversible loss of memory and other mental abilities and ultimately leads to death. In addition to generalized brain deterioration, it also affects the immune system increasing the susceptibility of patients for infectious diseases which represent the most frequent cause of death in AD. The etiology of the disease is not completely understood but the formation of amyloid plaques in the brain has been associated with the neuronal degeneration. There is currently no cure for AD and, furthermore, no treatment has been proven successful to slow down the progression of the disease.

A number of international healthcare companies are exploring the potential of vaccines to treat AD. However, because of the ubiquitous nature of the disease-causing protein (beta-amyloid), potential autoimmune reactions represent major obstacles that need to be bypassed. In principle, a functional and safe vaccine would allow the immune system to discriminate between two types of beta-amyloid proteins, the one on the brain cells membrane (non-toxic) and the one in the brain fluid which is responsible for the formation of beta-amyloid plaques.

Affiris uses its proprietary technology Affitopes to generate synthetic peptides that mimic the structure of natural epitopes of human disease-causing proteins. Affitope-vaccines are capable of inducing a therapeutic immune response without the side effects normally observed upon vaccination with the more conventional epitope-based compounds. The Alzheimer's vaccine developed by Affiris is expected to trigger an immune response in patients selectively against the toxic beta-amyloid protein (main component of the amyloid plaques). The healthy amyloid precursor protein (APP) which is a transmembrane component of the brain cells necessary for normal brain cell function would not be recognized. AFFITOPE AD-01, the first Affiris vaccine, is currently undergoing Phase I clinical trials to asses its tolerability.

Affiris has already protected all peptide sequences that can be used to attack the toxic beta-amyloid proteins. Moreover, in February 2008, the company obtained an additional European patent for an innovative approach to treat AD. Based on its proprietary AFFITOME technology, the method consists in dialysing the blood of AD's patients to reduce the concentration of beta-amyloid proteins in the brain.

Cellerix SL: adult stem cells therapeutics

Year of Foundation: 2004

Registered Office: Calle Marconi, 1-Parque Tecnológico de Madrid-Tres Cantos - Madrid, 28760 - Spain

Business Model: R and D

Sector: Biotechnology

Subsector: Immunity; Dermatology; Gastroenterology

Management: Eduardo Bravo (CEO); Claudia D'Augusta, PhD (CFO)

Web site: www.cellerix.com

Pipeline: CX-401 / Dermatology / Phase III

CX-501 / Dermatology / Phase II

CX-601 / Immunomodulation / Preclinical

Investors: Dutch LSP BioVentures; Ventech; Ysios Asset Management SGECR; Roche Venture Fund; Novartis Venture Fund

Another challenging approach against diseases is the revolutionary use of adult stem cells in therapy. The increasing involvement of the pharmaceutical industry in adult stem cells research is related to their therapeutic potential for a broad range of applications. Research on adult stems cells has major advantages when compared to embryonic stem cells since they can be obtained directly from patients and do not require the use of human embryos.

Adult stem cells, which are not completely differentiated, are isolated from a small sample of tissue and can be reprogrammed to generate all cell types potentially regenerating an entire organ. The discovery that stem cells can be used to repair tissues and organs in living organisms by substituting the damaged cells opened the way to an incredible number of medical applications.

Cellerix, a Spanish biopharmaceutical company, is focusing on the clinical development and production of innovative medicines based on adult stem cells obtained from human adipose tissue. With an interesting pipeline of products in development for the treatment of pathologies in the field of gastroenterology, dermatology and immune-based diseases, Cellerix has been selected mainly for the value and market potential of its innovative therapeutics.

In September 2007, Cellerix closed a Euro 27.2 million Series B financing round with the participation of several European investors led by the Dutch LSP BioVentures and the French Ventech. In addition, Ysios Asset Management SGECR of Spain, Roche Venture Fund and Novartis Venture Fund, both of Switzerland, joined the round.

Such a significant participation of international investors in Cellerix pipeline development is an implicit indication of the great expectations around stem cells therapy and also a recognition of the approach adopted by Cellerix. More importantly, this financial support will definitely contribute to the advances in stem cells research and to the further development of Cellerix innovative therapeutics. The company has two products undergoing clinical trials: CX-401 for the treatment of perianal fistulas which entered Phase III in October 2007 and CX-501 for skin regeneration currently in Phase II. In addition, the company is conducting preclinical development with therapeutics for the treatment of alterations of the immune system. Cellerix also develops new therapeutics from mesenchimal stem cells and from bone marrow which are capable of suppressing immune responses both in vitro and in vivo.

Moberg Derma AB: Skin disease

Year of Foundation: 2006

Registered Office: Gunnar Asplunds Allé 32, Hus D - Solna, SE-171 63 - Sweden

Business Model: R and D

Sector: Drug Development

Subsector: Infectious Disease, Dermatology

Management: Peter Wolpert (CEO); Anna Ljung (CFO); Kjell Rensfeld (CSO)

Web site: www.mobergderma.se

Pipeline: K-101 / Anti-Infective / Phase III

K-201 / Dermatology / Discovery

K-301 / Dermatology / Phase III

Good targets for investment in the healthcare sector have not always to be searched among the companies that focus on the major life threatening diseases. The market potential of medicines that cure chronic and more common illnesses or simply improve our quality of life is often underestimated and can be a valid option.

The Swedish pharmaceutical company Moberg Derma, founded in 2006, develops novel dermatological products to treat skin diseases and represents a good example of extremely young company in rapid expansion which has been capable to attract the interest of institutional and private investors. In June 2007 the company completed the financing of SEK 27.7 million (US$ 4.44 million) with the Baltic Sea Foundation as lead investor.

Moberg Derma develops pharmaceutical products and cosmeceuticals based on its proprietary principle Kaprolac® and in less than two years of activity has been able to develop two therapeutics until Phase III. The K-101 product for the topical treatment of Onychomycosis (nail fungus) entered Phase III in September 2007 and the K-301 product for Seborrheic Dermatitis of the scalp entered Phase III at the beginning of 2008. Results from both trials are expected in the second half of 2008.

The safety profile of Kaprolac® products, mixtures of well-known and safe dermatological compounds, represents an important element in Moberg strategy since novel therapeutic or cosmetic candidates can rapidly enter late-stage clinical development. Additional products are under evaluation. In addition, the company is constantly seeking for opportunities to outlicense its products in territories outside the Nordic European countries and is also interested in purchasing rights to inlicense dermatological products which are already approved or will be approved by 2009.

Novexel: Antibacterial and antifungal agents

Year of Foundation: 2004

Registered Office: Parc Biocitech 102, route de Noisy - Romainville, F-93230 - France

Business Model: R and D

Sector: Drug Development

Subsector: Infectious Diseases

Management: Iain Buchanan (CEO); Gordon Waldron (CFO); John Hodgson (CSO)

Web site: www.novexel.com

Pipeline: NXL-104 / Anti-Infective / Phase I

NXL-101 / Anti-Infective / Phase I

NXL-201 / Anti-Infective / Phase I

NXL-103 / Anti-Infective / Phase II

PBP INHIBITORS / Anti-Infective / Discovery

Investors: Edmond de Rothschild Investment Partners (major investor); Atlas Venture; Sofinnova; Abingworth; 3i; Novo A/S; BIT; Goldman Sachs; NeoMed; NIF SMBC

Antibacterial resistance represents nowadays a serious obstacle for the treatment of infections with severe consequences for patients such as prolonged illness and greater risk of death. As a consequence of extensive use of antibiotics during the last 30 years especially in developed countries, normally curable diseases are rapidly becoming harder to treat because of the spreading of microbes resistant to standard therapies.

Novexel, a pharmaceutical company with expertise in Biology, Medicinal Chemistry, Pharmacology, Microbiology and Clinical Development, researches and develops novel antimicrobial compounds potentially active against multi-resistant organisms. Patients infected with antimicrobial-resistant organisms normally require longer and more complicated treatments and this can also increase the probability to spread a resistant strain among the population. Novexel intends to establish a leader position in the hospital anti-infective market which represents a strategic and important target in the battle against antibacterial resistance. The company is conducting preclinical studies on non-ß-lactamase inhibitors of Penicillin Binding Proteins to develop novel therapeutics for the specific treatment of nosocomial infections.

Four compounds are already in clinical development. The oral streptogramin antibacterial compound NXL-103 (formerly XRP2868) entered into Phase II in November 2007. Sanofi-aventis holds an option until the end of Phase IIa for this compound. Under this agreement, initiation of Phase II triggers the payment of a quarterly option fee from Sanofi-aventis to Novexel. NXL-101 (formerly AVE4221), a bacterial topoisomerase inhibitor targeting Gram-positive bacteria, entered Phase-I studies in September 2006. Novexel's spectrum ß-lactamase inhibitor, NXL-104 (formerly AVE1330A), entered Phase I clinical trials in December 2006. The aminocandin anti-fungal, NXL-201 (formerly HMR3270), is currently undergoing reformulation studies after initiation of Phase I clinical trials.

In 2004 Novexel, as a spin-out of Sanofi-aventis, acquired the intellectual property for an advanced portfolio of anti-infective compounds and received Euro 40 million in financing from an international group of leading life science investors led by Atlas Venture and including Sofinnova, 3i, Abingworth Novo A/S and BIT.

In January 2007, the company raised Euro 50 million in a Series B fundraising which represents the largest funding raised by a private European company in the healthcare sector in the last twelve months. Edmond de Rothschild Investment Partners became the new principal investor and led the fundraising. All Novexel's existing investors participated as well as other new investors, Goldman Sachs, NeoMed and NIF SMBC (Tokyo).

At the end of January 2008, Novexel entered into an agreement with Forest Laboratories Inc. for the development, manufacture and commercialization of NXL-104 in combination with Forest's ceftaroline. NXL-104 is designed to be co-administered with select antibiotics to enhance their spectrum of activity. Under the terms of the license, Forest will receive the exclusive rights to administer NXL-104 with ceftaroline as a combination product in North America. Under the terms of the agreement, Forest will pay Novexel an upfront license payment of Euro 75 million and will fund development and commercialization of the ceftaroline/NXL-104 combination. Additional milestone payments to Novexel if the combination product is successfully developed will follow in addition to a low double digit royalty on product sales throughout North America after product's regulatory marketing approval.

Onepharm: Small molecule drugs to treat viral diseases

Year of Foundation: 2005

Registered Office: Veterinärplatz 1, Building IA - Wien, 1210 - Austria

Business Model: R and D

Sector: Drug Development

Subsector: Infectious Diseases

Management: Bernhard Küenburg (CEO); Oliver Szolar (CSO)

Web site: www.onepharm.com

Pipeline: OPM-1001 / Anti-Infective / Preclinical

OPM-3001 / Anti-Infective / Phase I

Investors: Austria Wirtschafts Service (AWS); Forschungs Förderungs Gesellschaft (FFG); Zentrum für Innovation und Technologie (ZIT); Private investors

Seasonal influenza affects each year 5-15% of the population with upper respiratory tract infections. Influenza can represent a serious problem for very young and old individuals and for people already affected by chronic diseases such as lung diseases, diabetes, cancer, and cardiovascular problems. With three to five million cases and 250 000 to 500 000 deaths occurring every year worldwide in developed countries, influenza has a considerable economic weight.

Onepharm is a young biotech company developing novel antiviral and anti-inflammatory compounds with a special focus on the screening of new interesting molecules. The company develops the drug until Phase II and constantly searches partnerships with established pharmaceutical companies to carry out Phase III, registration and product launch. Small molecules active in viral respiratory tract diseases such as the common cold, influenza, bird flu, and SARS represent the main interest of the Onepharm.

The company was co-founded in 2005 by its management and Green Hills Biotechnology, a biopharmaceutical company specialized in virology that develops and commercialize innovative products offering cost-effective treatment against viral infectious diseases and cancer. Green Hills transferred their expertise and corresponding patents into Onepharm and became a founding partner and shareholder.

Since the end of 2006, Onepharm attracted additional funds of more than 2 million euros. In June 2007, the company finalized a capital increase with private investors and received funding of over 3.5 million euros from Austrian private investors, Austria Wirtschaftsservice and the Research Promotion Agency. Finally, in October 2007 the company successfully concluded an exclusive cooperation agreement with the Japanese pharmaceutical company Minophagen. Under this agreement Onepharm obtained exclusive access to the whole preclinical and clinical data package, as well as to the Minophagen's market products for influenza.

The lead compound OPM-3001, isolated from a medicinal plant, is currently in Phase I and should enter into clinical Phase 2 during the flu season 2008/2009. OPM-3001 represents an innovative remedy with a strong combined antiviral and anti-inflammatory activity and has the potential to become a suitable treatment option for viral diseases with pandemic potential. In addition, Onepharm aims to expand its portfolio of therapeutics for the treatment of different viral respiratory tract diseases and a number of additional compounds is currently under investigation.