Lundbeckfonden Emerge

Emerge is the Foundation’s early-stage, evergreen investment unit, building and financing biotech companies based on Danish research. Emerge invests in pioneering research that promises to deliver significant patient benefit as well as having commercial potential.

2021 was a transformative year for Emerge, which saw two portfolio companies close large financing rounds with international investors, followed by the first ever IPO of an Emerge portfolio company. The portfolio companies also made substantial progress in research and development during the year, and several companies initiated clinical studies or reported important results from ongoing clinical trials.

Afyx Therapeutics announced positive Phase IIb efficacy and safety data for Rivelin® clobetasol for the treatment of lesions in oral lichen planus, a chronic inflammatory condition causing agonising mouth ulcers. If approved, Rivelin® clobetasol, would be the first approved treatment option for such patients.

NMD Pharma, which develops innovative medical treatments for rare neuromuscular diseases, dosed its first myasthenia gravis patient in a combined Phase I/IIa clinical trial of its lead compound, NMD670, and announced that it has initiated an international observational study in collaboration with Aarhus University and The Ohio State University to assess neuromuscular function in patients with Charcot-MarieTooth (CMT) disease.

IO Biotech published best-in-class efficacy data from a Phase I/II study of IO102 and IO103 in first-line melanoma patients in the high impact journal, Nature Medine. This followed the ‘breakthrough therapy’ designation for the combination of IO102 and IO103 with an anti-PD-1 monoclonal antibody (mAb) for patients with unresectable metastatic melanoma, which was granted by the US Food and Drug Administration (FDA) towards the end of 2020.

Emerge also supported several portfolio companies in their follow-on financing, including IO Biotech and CytoKi Pharma.

IO Biotech completed an IPO on Nasdaq, raising USD 115m. The IPO followed the closing of an oversubscribed EUR 127m series B financing round earlier in the year, and the company will use the combined proceeds to fund clinical trials for its early- and late-stage immuno-oncology programmes, including a large, randomised trial for IO102 and IO103 with an anti-PD-1 mAb in metastatic melanoma, and a Phase II basket trial in non-small-cell lung cancer (NSCLC) and other solid tumours. The late-stage trials will be conducted in collaboration with MSD, under two new clinical trial collaboration and supply agreements that were also established in 2021.

Elsewhere in the portfolio, CytoKi Pharma raised USD 45m in series A financing. CytoKi Pharma is advancing a longacting interleukin-22 (IL-22) variant to clinical testing, initially focusing on inflammatory bowel disease, and the proceeds from the series A round will be used to support the development of the IL-22 programme through clinical proof of concept studies and, in addition, explore expansion into additional pathologies related to epithelial tissue injury.

Finally, SNIPR Biome secured up to USD 3.9m in funding from Carb-X – a leading global non-profit partnership dedicated to accelerating antibacterial research - to develop its lead programme SNIPR001 for the treatment of E. coli infection in cancer patients. SNIPR Biome is pioneering a novel use of CRISPR/Cas technology to selectively eradicate pathological bacteria based on specific DNA sequence signatures in the bacterial genome, while leaving the rest of the patient’s microbiome intact. Furthermore, the company announced a research agreement with Novo Nordisk and a collaboration with The University of Texas MD Anderson Cancer Center and the granting of a fundamental patent in the field of CRISPR-based targeting in microbiomes by the European Patent Office.

FINANCIAL RESULTS The net return for the year was DKK -107m versus DKK 1m in 2020. The 2021 return was affected by a loss of 142m related to IO Biotech.

The fair market value of the portfolio was DKK 624m at 31 December 2021, compared to DKK 348m at the end of 2020.

At year-end, the Emerge portfolio comprised seven companies, of which, one was listed. The complete portfolio is listed on the following page.

PUBLIC PORTFOLIO COMPANY

IO Biotech develops disruptive cancer immune therapies, directing the immune system to target cells expressing so-called ‘checkpoints’. This allows the immune system to directly engage with otherwise ‘cloaked’ malignant cells. The combination of the company’s lead programmes, IO102 and IO103, currently in late-stage clinical development, has been granted US Food and Drug Administration (FDA) ‘breakthrough therapy’ designation in combination with anti-PD-1 monoclonal antibodies for patients with unresectable metastatic melanoma.

PRIVATE PORTFOLIO COMPANIES

Afyx Therapeutics is developing a new therapy for diseases of the oral cavity, using technology based on the Rivelin® clobetasol patch which, uniquely, adheres to mucosal surfaces in order to deliver medicines. The first product candidate, which is in late-stage clinical development, targets oral lichen planus (OLP), for which there is currently no approved treatment.

CytoKi Pharma is a discovery-stage biotech company, which was founded in 2019 based on an exploratory investment from Emerge. The company is developing a preclinical long- acting interleukin-22 candidate in irritable bowel disease and other pathologies related to epithelial tissue injury. Folium Science uses CRISPR technology to precisely manage microbial and bacterial populations to enhance soil, animal, plant and, ultimately, human health, in the agriculture, food and beverage industries. The company continues in its quest to bring its technology to the food and feed industries and to launch the first product for controlling salmonella in industrial chicken feed.

Based on world-leading electrophysiology science, NMD Pharma develops innovative medical treatments for rare neuromuscular diseases such as myasthenia gravis. The company’s lead programme is currently in Phase I/IIa clinical trial for the treatment of symptoms of myasthenia gravis.

SNIPR Biome is developing new therapies based on CRISPR gene technology –which allows the precision killing of bacteria – for use in the management of untreatable and difficult-to-treat infections, as well as complex diseases directly impacted by the human microbiota. Vesper Bio is developing a Vps10p antagonist programme focused on central nervous system- and peripheral diseases. The programme is currently in preclinical development where it has demonstrated proofs of concept in models of disease.

“2021 was a year that saw advances across our portfolio, culminating in IO Biotech’s IPO, a first for Emerge. This validates our long-term strategy of investing in worldclass Danish innovation that brings the promise of novel medicines to patients across the world”

CHRISTIAN ELLING Managing Partner, Emerge