INNOVATOR

A highly contested topic of late in biotech is which business model works best for biotech companies. One model that seems to be generating a lot of debate is the value of university spin-offs or spin-outs. Count Dr. Jeffrey Coull, CEO and president of Chlorion Pharma among those who believe in the merits of such a model. Interestingly enough, Chlorion Pharma is a university spin out company whose primary focus is in neurology and the development of novel classes of therapies to restore the normal functioning neurons and other cells.

Chlorion pharma SpINNING OUT SucceSS

“I always hear people say it just doesn’t happen anymore, the idea of a successful university spin-out. Often they ask is it even possible to spin-out? I keep saying yeah it is and that more people should be doing it especially here in Canada where there’s lots of great science,” states Coull.

He adds that the dynamics of success are still the same in the spin-out model, beginning with having the right vision, the right strategy, assembling the right team and of course, raising the capital needed in a timely manner.

“It’s all about marrying good technology with a great managerial team,” he says, adding that the first element to success: the technology, can be easily found in our universities but the latter part, i.e. finding the right team and raising capital, is definitely a little more challenging.

“It takes time to put together all these elements to produce a successful spin out, but it is still possible,” he says.

Coull speaks from experience, after all while it took close to seven years for him and his two co-founders to get Chlorion to where it is today , it is now a company backed by good science and an experienced management team.

The story of Chlorion begins in 2002 in Quebec City, when Coull along with Drs. Martin Gagnon and Yves De Koninck discovered in a Laval University lab, that in conditions of neuropathic pain, the co-transporter KCC2 was dysfunctional in pain-related neurons in the spinal cord. Specifically, KCC2, which normally pumps chloride out of neurons, was discovered to be not operating at full efficiency allowing chloride to accumulate in the cell, increasing hypersensitivity (see Coull et al., Nature, 2003 and 2005).

“Say you have nerve injury in your arm or leg, it sends a signal to your spinal cord, which causes this shift whereby the neuro gate that normally prevents touch related information from being perceived as pain in its normal state, goes to being perceived as pain in the pain centres of the brain after trauma,” he explains. “From the very beginning, we wanted to understand what things contribute to that neuronal gate swinging open.”. In trying to understand why neurons in

“It’s all about marrying good technology with a great managerial team. The first element to success: the technology, can be easily found in our universities but the latter part, i.e. finding the right team and raising capital, is definitely a little more challenging.”

the spinal cord become hyperactive after nerve injury, Coull, Gagnon and De Koninck made several interesting observations using electrophysiology to measure this change. They found that the reason that touch related input doesn’t activate these neurons is because of an inhibition mediated by this transmitter system called GABAergic.

“In a nutshell, a channel opens and chloride rushes into the neuron. The reason it rushes into the neuron is because the level of chloride outside the neuron is so much higher than it is on the inside that it’s like water, its going to go from a region of high concentration to a region of low concentration.”

What they also found was a neuron in the spinal cord was responsible for making the decision if it sent a painful signal or not. Specifically they found that two co-transporters, NKCC1 and KCC2 were responsible for maintaining low levels of chloride in the neurons. Moreover, in animal models where there was nerve injury there was reversal of the action of chlorides.

“GABAergic opens and chloride was actually leaving the neuron. The key point is when it starts to leave the neuron it causes a lot of hyperactivity, and the cells are no longer regulated. That’s because they’re so hyperactive, they can’t filter out information from a paint brush, for example, on the hand they react anyways and that’s why it’s perceived as pain at the level of the brain. The reason that the level of chloride goes up is because of a dysfunction of this co-transporter, KCC2. You can think of KCC2 as an outlet valve. So you can’t get rid of this chloride anymore, it starts to accumulate inside the neuron and it makes it hyperactive.”

Just before publishing these papers, the trio filed three patent applications through Laval University protecting their ability to leverage these discoveries to develop novel drugs. In 2004, Chlorion Pharma, Inc. was officially founded. The next step was trying to sell to investors the promise of the idea, particularly the benefits of identifying compounds that would provide better treatments for neuropathic pain through targeting.

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“We went out to investors and said we have this interesting IP, patent applications and what we want to do is build some assays, provide throughput screening and see if we can pull out some interesting hits that may have potential utility as novel analgesics. Our therapeutic strategy was to go in hit that dysfunction co-transporter KCC2, turn it on and empty out the chloride, and bring it back to normal.”

While the potential was exciting, Chlorion was generating very little interest from the investor community. Rather than giving up on the idea, Coull felt a new approach was needed. While Gagnon continued moving forward with the research, Coull returned to Ontario to take on a job with the life sciences

consulting firm SHI Consulting in order to get some seasoning on the business side of biotech. “It was a great experience as I got the chance to work with fortune 500 pharma companies as well as smaller biotech companies, government and universities. I learned a lot about strategic planning, opportunity evaluation and perhaps most importantly what I needed to do to generate interest in Chlorion. In many ways I think of it as my MBA, jumping right into the corporate side of things, having only had scientific training before that. I think that was very important and informative to me, and beneficial to the company.”

At the same time, Dr. Gagnon was making some headway with the research, using his post doc to build assays, and ultimately in 2006, was able to do some high throughput screening in collaboration with the National Research Council in Montreal. In doing so Gagnon pulled out some real interesting hits.

“We took those hits and put them into some animal models of pain generating positive results. The whole time all this research was being done, I was not only in consulting but also trying to raise money on the side. I was knocking on door after door, in Canada and the U.S., to some extent even in Europe,” said Coull. “It was a painstakingly slow process, but every time I had a meeting I was learning something new.”

Ultimately, Coull was eventually successful in attracting a few investors from Quebec in the summer of 2007.

“At that point we had finished our assays, had done our high throughput screening and sorted out the chemical hits. We had hits, positive animal data, and with that we did a Series A $6 million round and we took that and filled out our team.”

Chlorion moved from its Laval University labs into, ironically, a facility across the province in Laval, Quebec (the suburb of Montreal) at the QBIC (Quebec Biotech Innovation Centre).

“This is the point where we addressed the need to put together a great scientific and management team. First, we hired a real good director of chemistry, Giorgio Attardo, as well as seven other chemists. We started moving forward with our first chemistry effort, started optimizing one compound to make it better for oral administration, better selectivity and better potency against KCC2.”

In the summer of 2008, Chlorion had found its first compound to take into full development and then into humans. Unfortunately, that’s when the company ran into a bit of a clinical problem.

“The problem we ran into mostly related to the formulation of the compound. Going into this I had never thought a stupid little problem like the ability to put that drug into a solution or liquid solution could kill a drug. Unfortunately we had to kill that, and start again.”

So back to the drawing board the team went feeling confident that they would uncover the right compound, in the meantime the company continued to strengthen its team, hiring Franz Hefti as its chief development officer.

“He was an individual with quite the track record in neuroscience as the head of neuroscience at Genetech and at Merck. In addition to all that he had written a book about drug discovery in the central nervous system. Not only did he bring experience to our management team, he also brought in a lot of vigour and a lot of CNS knowledge to our program.”

The company went one step further hiring, Irenej Kanicka as its director of pharmacology, and before long, following

“It was a great experience as I got the chance to work with fortune 500 pharma companies as well as smaller biotech companies, government and universities. I learned a lot about strategic planning, opportunity evaluation and perhaps most importantly what I needed to do to generate interest in Chlorion.”

multi-dimensional screening of hundreds of novel openers, they identified a stronger pre-development candidate referred to as CLP-635.

“It’s a compound that is really outstanding not only in the efficacy data we’ve seen but also because of its high oral bioviability. Essentially, if you give the drug by mouth orally, you get 95 per cent of the compound into the blood that you would get if you would inject it directly intravenously into the blood system. That’s really good absorption from the stomach. It also has a great half-life.”

The compound has also performed well in comparison to Pfizer’s Gabapentin, one of the leading drugs on the market for neuropathic pain, having less of an affect on motor function. Early indications are that when looking beyond a single dose or long term dosing, it performs better then Gabapentin in terms of tolerability.

“That’s the problem with current CNS drugs on the market right now. They have efficacy, but they’re really not well tolerated. Patients have weight gain, because of the sedative properties, they get headaches and all sorts of nasty things to the point they no longer want to take them. They would rather grin and bear their pain. That’s what makes it CLP635 so special. If you look at all the drugs in the pipeline today worldwide, I don’t know if you’d find one that marries tolerability and efficacy as well as our compound does.” This is not the only aspect that makes Chlorion’s compound attractive to potential buyers.

“Beyond the compound, the interesting case about targeting KCC2 is that there has been evidence recently showing that it has a role in many different disorders particularly those in the central nervous system. It’s not only things like pain, but also epilepsy, stroke, traumatic brain injuries, and on the medical psychiatric side as well, anxiety, bi-polar, the list goes on. So that makes this really interesting, because if you can find a compound that treats KCC2 for one thing, chances are good that it would be very useful for others.”

Even big pharma is starting to pick up on this target.

“Merck in their worldwide areas of interest book last year included KCC2 for the first time, and it’s starting to get some traction in other trade journals. People are beginning to wake up to the potential of targeting this.”

So where is this compound now?

“Well, in the summer we should be in humans, September is what we’re aiming for. We need to take it through the standard GOP studies and then into Phase 1. We also have a backup compound that has been developed to the same point.”

He believes none of this would’ve been possible had he not gone the spin-out route.

“That, I think, is what has allowed us to do things so efficiently, not only in terms of time but also in terms of capital. I don’t think any of what we’ve accomplished would’ve been possible if we had outsourced everything. We built our own medicinal capacity, our own bioanaltyical chemistry team and our own vivarium. I’d say 90 per cent of the work we did ourselves and now we have a single program, with a top notch team. If we had gone a different route, I think we’d have been hard pressed to deliver the same robust results.”

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