September 15, 2009 (Vol. 29, No. 16)
Pergamum Will Include Five Dermatology and Wound-Healing Focused Companies
In July Karolinska Development, which has a large life science portfolio in Europe, established a new company, Pergamum, to manage and support its dermatology and wound-healing portfolio companies.
Owned 65% by Karolinska Development, Pergamum will actively work with its five companies to provide financial and regulatory support along with drug development, strategic planning, and business management resources.
The Pergamum model will allow maximum value to be gained from the five businesses, believes Conny Bogentoft, Ph.D., CEO at Karolinska Development.
“We have an exciting group of companies in this area, and we expect the new setup to both reduce costs and speed up development times,” says Dr. Bogentoft. “It also offers considerable advantages when seeking exit opportunities. Pergamum will be able to represent several or all of the companies when discussing sales or licensing opportunities with pharma companies. We are not aware of any other similar situation within the industry.”
The five companies within the Pergamum portfolio work in fields ranging from the prevention of postsurgical adhesions to new treatments for inflammatory disorders. BioCis Pharma is developing new drugs based on the mode of action of endogenous photoreceptor molecules in the skin; DermaGen specializes in the development of topical peptide therapeutics based on antimicrobial peptides; PharmaSurgics’ expertise is in novel treatments for the prevention of postsurgical adhesions; Omnio Healer is an inflammatory-disease company initially targeting otology indications; and Lipopeptide is focused on new treatments for hard-to-heal wounds.
Three of these companies have products in clinical development. During mid-July 2009, PharmaSurgics successfully completed a Phase I trial with drug candidate PXL01, which is initially in development to prevent postsurgical adhesion formation following hand surgery. Earlier in the same month DermaGen completed patient enrollment for a Phase I/IIa trial with DPK-060, an antimicrobial peptide in development for the treatment of atopic dermatitis.
Also in early July, BioCis announced positive results from a Phase IIa trial with its ProtoCure™ emulsion cream in patients with mild-to-moderate atopic dermatitis, and in May the company started a Phase I study with ProtoCure intravesical instillation solution for urinary bladder cancer.
The establishment of Pergamum represents the latest in a series of evolutionary steps undertaken by Karolinska Development, which has to date invested $83 million in a portfolio which now comprises over 40 life science companies. Within this portfolio, three companies have marketed products and twelve have clinical-stage programs, including seven compounds in Phase II trials. There are 18 first-in-class molecules at various preclinical/clinical stages of development.
The evolution of Karolinska Development has involved a series of carefully orchestrated metamorphoses since its inception 15 years ago. The concept was originally the brainchild of the then-president of the Karolinska Institutet, Hans Wigzell, M.D. His vision was to establish an engine specifically to foster and help bring to market the most promising technologies to emerge from the Scandinavian academic life sciences sector, explains Dr. Bogentoft, who has himself been instrumental in Karolinska Development’s growth and success over the last 10 years.
“Dr. Wigzell believed it is essentially immoral not to make the effort to help progress and commercialize promising technologies developed through what is frequently state-funded academic research,” he says.
Dr. Wigzell’s vision initially led to the formation of an investment fund, but it soon became evident that venture capital was reticent to commit to early-stage technologies. “As a result,” Dr. Bogentoft continues, “Karolinska Development was established in 2003 as an investment company, with just €10 million ($14 million). Its original role was to provide seed funding to promising new companies, but over subsequent years we have altered the business model and one of our strengths is that we can now invest in companies at any stage.”
Karolinska Development today is thus in its third incarnation, and having raised some €100 million ($142 million), it is this model that has proven most successful. “Because we can invest at any stage, we can also decide on the optimum exit point for both owners and innovators. Each exit strategy and timing is unique to the product and business situation.”
Innovations at the Institute
Key to Karolinska Development’s operation is its close relationship with Karolinska Institutet Innovations (KIAB), which is owned by a holding company established by the Karolinska Institutet. KIAB essentially screens new opportunities to assess their scientific validity and commercial potential, and gives Karolinska Development first rights to invest in the most promising innovations identified.
Operating as an umbrella organization to support the progress of new ideas, KIAB has already evaluated over 1,000 new projects from a hub of 10 universities from the Nordic countries, providing what it believes represents a unique deal flow from these universities.
“KIAB essentially acts as a comprehensive incubator, evaluating, validating, and helping to patent new technologies and managing the new companies,” Dr. Bogentoft explains. “Karolinska Development’s relationship with KIAB means it rarely has to seek out new opportunities for investment, and although not all its portfolio companies are selected from the KIAB pot, the ability to cherry-pick from a pool of the most promising, scientifically elegant, and commercially viable developments significantly helps reduce attrition rate at all stages.”
Karolinska Development also has its own drug discovery company, Actar, based on the Karolinska Institutet campus in Stockholm. Actar works with academic researchers to help discover and validate drug candidates against new targets, which could either form the basis of a new company or be licensed out to big pharma.
Network of Expert Advisers
Karolinska Development’s management team has experience in product development and business within big pharma and is thus able to speed the development of portfolio companies. This team is supported by a network of some 300 specialists, including project managers, business development experts, and board members from a range of companies, who can be called on to provide portfolio companies with their particular areas of expertise when required.
“Our management and network means we have a business-focused approach to our portfolio companies, and can steer them in the right direction to expedite the progress of new products into the clinic and toward commercialization,” Dr. Bogentoft adds.
With the goal of taking on five or six new companies a year, Karolinska Development generally takes a lead-investor position in its portfolio business, which both gives it a controlling position, and also means the start-up doesn’t have to think about raising money during its early stages. With funding secured, sometimes until late-stage clinical trials, the researchers can get on with the job of developing products backed by the business, regulatory, and patenting know-how of Karolinska Development’s network.
Karolinska Development has now reached the stage where it is preparing for a stock market listing, Dr. Bogentoft says. “Our ambition is now to reward our owners, and prove that digging for gold in the biotech arena can and does pay dividends, both for investors and hopefully for the patients of the future.”