Avalyn’s New Twist on Older Lung Disease Drugs Attracts $175M for Clinical Trials

The lung disease Idiopathic pulmonary fibrosis (IPF) has few available treatments, and that medical need has drawn research interest from big pharmaceutical companies and smaller biotechs. Avalyn Pharma’s approach is a new twist on two older drugs and it has raised $175 million for clinical testing.

In IPF, scar tissue called fibrosis forms in the lungs. The chronic disorder leads to worsening breathing problems that become fatal within three to five years of diagnosis. The two FDA-approved IPF therapies, nintedanib and pirfenidone, don’t cure the disease but they can slow its progression. However, these small molecules are taken as capsules. Circulating throughout the body, they spark side effects such as nausea, rash, sensitivity to light, and weight loss. These tolerability issues lead many patients to stop using the drugs.

Avalyn aims to improve on nintedanib and pirfenidone with inhalable versions that keep the effects of both drugs targeted to the lungs. The Seattle-based company has published data from a Phase 1 test of APO1, an inhalable version of pirfenidone, showing improved tolerability and lung function compared to oral formulations of the drug. Avalyn has also said APO2, its inhaled version of nintedanib, was well tolerated in a Phase 1 test that enrolled healthy volunteers and IPF patients.

“Fewer than 30% of patients in the U.S. are treated with either of the two approved oral medicines today due to their significant tolerability challenges,” Avalyn CEO Lyn Baranowski said in a prepared statement. “There is an urgent need for effective treatments that patients can tolerate, which we believe can be addressed with inhaled delivery.”

With the new capital, Avalyn plans to advance APO1 into a Phase 2b study and APO2 into a Phase 2a test. Avalyn’s Series C financing was co-led by Perceptive Xontogeny Venture Funds, SR One, and Eventide Asset Management. They were joined by new investors, Vida Ventures, Wellington Management, Rock Springs Capital, funds and accounts advised by T. Rowe Price Associates, Surveyor Capital, Catalio Capital Management, and Piper Heartland. Current investors, including Novo Holdings A/S, Norwest Venture Partners, F-Prime Capital, Pivotal bioVenture Partners, and RiverVest Venture Partners, also participated.

With the third quarter of 2023 now closed, here’s a look back at some other recent biotech financings.

—Protein design company Evozyne raised $81 million to support its generative AI-powered drug discovery technology. Chicago-based Evozyne has partnerships with Takeda Pharmaceutical and Nvidia. Fidelity Management & Research Company and OrbiMed led the Series B round, which also included the participation of NVentures, the venture capital arm of Nvidia.

—Cancer screening and detection startup Harbinger Health closed a $140m Series B financing. Planned uses of the funding include the completion of a 10,000 participant clinical study of its blood-based cancer screening platform.

—Hyku Biosciences launched with $56 million to support its research developing precision covalent cancer drugs that target amino acids such as histidines, tyrosines, and lysines. The startup was incubated in RAVen, the company creation engine of RA Capital Management. That venture capital firm was joined by Droia Ventures and Novartis Venture Fund in leading Hyku’s seed financing. Lexington, Massachusetts-based Hyku joins a growing number of startups working to expand covalent cancer drugs beyond the targeting of the amino acid cysteine.

—ReCode Therapeutics added $50 million to its Series B financing, bringing the round’s total to $260 million. New investors include BLV Ventures and Solasta Ventures. Menlo Park, California-based ReCode is developing genetic medicines with a platform technology that can target the delivery of a therapy to particular tissue type. ReCode is preparing for Phase 1 testing of a therapy for primary ciliary dyskinesia as well as an investigational new drug application for a cystic fibrosis therapeutic candidate. ReCode’s Series B round was initially $80 million raised nearly two years ago.

—RNA-editing therapies developer AIRNA launched with $30 million in financing. The startup says its approach delivers a safe oligonucleotide programmed to recruit an endogenous cellular enzyme, ADAR, to introduce a precise RNA modification, which results in changes to encoded therapeutic proteins. While the company aims to develop therapies for common diseases, its first target is the rare inherited genetic disease alpha-1 antitrypsin deficiency. AIRNA’s financing was led by Arch Venture Partners.

—Molecular glue startup Magnet Biomedicine launched with $50 million in financing. The Boston company’s technology discovers small molecules that prompt “cooperative interaction” between proteins. Magnet’s Series A round was led co-led by Newpath Partners and Arch Venture Partners.

—Acesion Pharma’s lead program is a potentially safer treatment for atrial fibrillation. The Copenhagen, Denmark-based has raised €45 million to bring that drug candidate, AP31969, to its first test in humans. The small molecule is an SK ion channel inhibitor. With the Series B financing, co-led by Canaan and Alpha Wave, Acesion said it has sufficient capital to support AP31969 through completion of Phase 2 testing.

—AbolerIS Pharma, a startup developing drugs for autoimmune diseases, raised €27.3 million as it prepares to advance its lead program to clinical testing. The antibody drug targets CD45RC, protein expressed on a subset of T cells and has potential application as a treatment for patients whose rheumatoid arthritis does not respond to standard of care drugs. The Belgian company’s Series A financing was led by Caixa Capital Risc and co-led by Sound Bioventures and earlier investor Newton Biocapital.

—Generate BioMedicines raised $273 million in Series C financing to support a lead SARS-CoV-2 program and other programs on track to reach human testing in the next two years. Somerville, Massachusetts-based Generate uses generative artificial intelligence to analyze known proteins and make predictions about the targets these proteins will bind to and their subsequent therapeutic effect. Generate currently has 17 programs and expects the new funding will enable it to start 10 new programs annually.

Generate last raised money in 2021, a $370 million Series B round of funding. To date, the company says its financing haul totals nearly $700 million. The latest financing attracted new investors including Amgen, NVentures, MAPS Capital, and Pictet Alternative Advisors.

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