Brandon Capital leads $14m investment to develop new cancer drug

Dunedin, New Zealand, July 8, 2021 – Brandon Capital leads $14m investment to develop new cancer drug

A new spinout from the University of Otago has secured $14 million in backing to help develop a new kind of targeted cancer drug in the emerging field of RNA therapy.

The Amaroq Therapeutics team, led by chief scientific officer and founder Dr Sarah Diermeier, are pioneers in exploring the use of long non-coding RNA molecules to target cancer treatment.

Diermeier said she’s aware of two other startups in RNA therapeutics that have recently left stealth mode, but both are focused on different areas of health (fibrosis and possibly neurodegenerative disease).

Australian-based life science investor Brandon Capital is leading the investment, which is the first the venture capital firm has made in its capacity as a government-backed deep tech incubator.

Shedding light on dark matter
Long non-coding RNAs (IncRNAs) are often referred to as the ‘dark matter’ of the genome. The emergence of new sequencing technologies over the past decade has opened up the mysterious molecules to research, and tens of thousands have been identified. Despite not coding for proteins (as genes do), IncRNAs seem to play important regulatory roles in the cell, but this is not yet fully understood.

Diermeier has identified specific IncRNA molecules present in high numbers in cancer cells but not normal health cells, and her team’s lab-based studies have shown that removing those molecules from cancer cells can slow down their division.

“This gives us real hope that IncRNA molecules could hold the key for treating many forms of common cancer,” Diermeier said.

The $14m will be used to fund the development of a new drug that will target and kill only cells containing those IncRNA molecules Diermeier has identified, and the initial testing of that drug in small numbers of healthy humans (known as Phase 1A clinical trials) and terminal cancer patients for whom several other drugs haven’t worked (Phase 1B).

Targeted therapies promise to avoid common side-effects of chemotherapy, such as stomach pain and hair loss, which arise because chemotherapy targets all rapidly growing cells including healthy cells such as hair and gut lining.

“We hope that our new treatments will significantly improve survival rates for cancer patients and are able to address issues such as resistance to chemotherapeutics,” Diermeier said.

Initially focus will be on treating cancers with a high unmet clinical need – such as breast, colorectal and liver cancers – but the drug could have other potential applications.

Lifelong dream
German-born Diermeier said the opportunity to transform her research into a drug represented “the fulfilment of a lifelong dream”.

“My whole journey started probably 20 years ago, when I was a teenager and had the first cancer cases in my immediate family and saw how terrible that was for the patients and for the family. And that’s when I decided, okay, I’ve got to do something about it. So, I went to university, did biochemistry, always with the goal to one day, bring new drugs to the patient.”

After completing her PhD in Germany, Diermeier carried out her post-doctoral studies under Professor David Spector of Cold Spring Harbor Laboratory, New York, a world leader in lncRNA research. She met her future husband, a Kiwi plant scientist also doing research in New York. After five years in the US, they tossed up between moving to Germany or New Zealand and New Zealand won. Diermeier set up her lab at the University of Otago in 2018.

Assuming success at phase 1, which is designed to check for toxic side effects, the next step would be phases 2 and 3 clinical trials, which involve larger groups and demonstrate efficacy.

Once clinically proven, a major regulatory milestone is gaining US Food and Drug Administration approval.

“That is my life goal – to have a drug in the clinic that has a positive impact on patient survival and patient wellbeing.”

Brandon Capital manages the Medical Research Commercialisation Fund (MRCF), Australia and New Zealand’s largest life science investment fund. The VC firm is one of four deep tech incubators selected for a revised Callaghan Innovation programme late 2019, alongside Palmerston North-based agritech incubator Sprout, Tauranga-based WNT Ventures, and US-based investment company Bridgewest Ventures.

Under the programme, Callaghan puts up a repayable loan of $750,000 for each investment (up from $450,000 previously), matched by $250,000 by the incubator.

The programme launch was delayed from April to October 2020, which Callaghan said was due to Covid, the agency’s lawyer dealing with a number of issues, and the incubators taking some time to get sign-off on new contracts designed to improve outcomes for the invested companies and the government backer.

Brandon Capital is the last of the four incubators to announce its first deal. Duncan Mackintosh, the firm’s New Zealand head, said investing in early-stage biomedical discoveries just takes time.

“We really are starting from scratch. A lot of opportunities we look at are just an idea or a research programme, and we need to work with the research organisation and the tech transfer office to build that into an opportunity that we can invest in. And that just takes time.”

Other funders are Otago Innovation, the commercialisation arm of the University of Otago; NZ Innovation Booster, a partnership between Booster Financial Services, Wellington UniVentures and Otago Innovation; and Cure Kids Ventures, a seed and early-stage healthcare fund owned by Cure Kids Foundation, New Zealand’s largest private funder of child health research.

Mackintosh said Brandon Capital was attracted to Diermeier’s expertise and the fact that the area was so novel. The deal gives Amaroq access to the fund’s extensive network of experts.

“We’re in it for the long haul,” Mackintosh said.

The expectation would be that after completing early trials, the startup would partner with a large pharmaceutical company for the final large-scale clinical trials and commercialisation milestones, whose costs are “eye-watering”.

“What we’re always aiming to do is really try and build as much value up into that point,” he said.

Fail fast
The MRCF is a collaboration between major Australian superannuation funds, the Australian and New Zealand governments, Australian state governments and more than 50 medical research institutes and research hospitals. It has more than A$700m under management.

New Zealand joined the fund in 2016 and Otago Innovation is one of six New Zealand members.

So far, the MRCF has made only one other investment in the country: $8m in Series A funding committed in 2017 for Kea Therapeutics Ltd, an early-stage pharmaceutical company set up to develop a new non-opioid drug pain-relief drug. Kea Therapeutics was a spinout of the Auckland Cancer Society Research Centre and University of Auckland’s Waikato Clinical Campus. But when the science did not stack up, the backers pulled the pin on the company after about two years.

“Drug discovery is inherently challenging, and we want to find out whether we can fail an opportunity early, because if we can, we can move on to the next opportunity and grow that as best as possible. And with Kea, that’s exactly what we did.”

There were more investments in New Zealand ventures to come, he said.

National Business Review
Nicola Shepheard
8 July, 2021