One of the biggest costs for the biopharma industry is that of drug R&D. “I’ve worked in the biopharma industry for more than 25 years, and I felt that the R&D sector was underperforming,” says Ulrich Grau, Ph.D., president, CEO, and cofounder of Lux Biosciences. “In my days at Hoechst Marion Roussel, one of the predecessor companies of sanofi-aventis, I was responsible for six or seven products in the company’s late-stage pipeline, with an annual budget of around $1 billion. As each project stays in this phase for about three years, this works out to be about half a billion dollars per project.”

Grau founded Lux, along with three colleagues from Enzon — Chief Medical Officer Eddy Anglade, M.D.; COO A. Clarke Atwell; and Senior VP of Project Planning and Analysis Sid Weiss — because they all felt they saw a way to carry out clinical development in a more efficient and effective way than the rest of the biopharma industry. “We have proved this theory by moving our lead products, LUVENIQ and LUMITECT, through late-stage development for around $35 million each,” says Grau.

One of the routes to success in any economic climate, and especially in a financial downturn, is the pragmatic selection of a therapeutic area founded on chronicity of disease, unmet medical need, a market easily accessible to a small sales force, and value to patients, physicians, and payors. Based on the broad spectrum of their background knowledge across many therapeutic areas, as well as their experience in all critical stages of drug development, Grau and his colleagues decided to focus on immune-mediated inflammatory eye disorders.

“As a smaller company, we can move rapidly into new areas and innovate when many of the larger companies in the ophthalmic space are looking to focus on life cycle management,” says Grau. “Not all of these markets are large, but there are either no existing therapeutics or the treatment choices are inadequate, and the disorders require long-term, often lifelong, treatment with a significant financial burden. As an example, by increasing the length of time before the disease progresses to blindness, our lead products could have a significant impact on the economic burden of uveitis [inflammation of the middle layer of the eye, or uvea, that could lead to blindness].”

Lux Biosciences is focusing on a number of therapeutic areas within ophthalmology:

Uveitis — The only class of drugs approved for uveitis are corticosteroids. Oral corticosteroids are only recommended up to 10 mg/day, but in practice may be dosed up to 25 mg/day, a level associated with increased cardiovascular risk and the development of osteoporosis, as well as other side effects. By developing a new systemic form of treatment, Lux Biosciences’ therapy targets the patients treated with oral steroids, which is approximately 30% of the uveitis population (United States and EU) or around 250,000 patients.

Corneal transplant — In the United States and Europe, around 50,000 individuals have a corneal transplant each year, with nearly 1/3 at an increased risk of rejection. There is currently no drug on the market for this specific indication.

Dry eye syndrome — This is a potentially billion dollar market, affecting about 10 million people in the United States and Europe. The disorder is a chronic one and requires long-term treatment. Current treatments are mostly palliative (artificial tears) or only modestly effective, according to Grau.

Constructing A Pipeline
Lux Biosciences has constructed its pipeline to facilitate rapid progress from the bench to the bedside, basing it around products with existing data licensed exclusively for ophthalmic indications — a next-generation immunosuppressant, voclosporin, and a series of bioerodible polymers for controlled drug release.

Voclosporin, a calcineurin inhibitor, is in clinical development with Canadian licensor Isotechnika for psoriasis and renal transplant. The common biological mechanism behind psoriasis and the inflammatory eye disorders meant that, though there was no clinical data on the product in the ophthalmic arena, Lux Biosciences could leapfrog the early development stages and move straight on to pivotal studies. “We argued that because the target for voclosporin is inhibition of proliferation of activated T cells, a common mechanism between psoriasis and uveitis, we could use the existing psoriasis clinical data and dosing rationale to allow us to skip phase I and II trials for LUVENIQ. The FDA and EMEA [European Medicines Agency] agreed and permitted us to go straight to a pivotal phase III study despite there being no data relating to voclosporin in the eye,” says Grau. The company used a similar tactic to omit early-stage clinical trials for LUMITECT.

The bioerodible polyarylate and polycarbonate drug delivery technologies licensed from Rutgers University allow almost linear sustained release of the drug for up to one year. These families of polymers have also been used in clinical applications and incorporate ingredients generally regarded as safe (GRAS), thus further speeding the development process.

The company’s lead product, LUVENIQ, is an oral formulation of voclosporin developed for the treatment of uveitis. Pivotal phase III trials, conducted in more than 500 patients in seven countries, are complete. Grau expects to submit it to the FDA by the end of 2009 and in Europe with the EMEA in early 2010. With the expected priority review, this could mean U.S. approval and launch for Lux Biosciences’ first product as early as mid-2010, with a European approval and launch in early 2011. Voclosporin has Orphan Drug designation in Europe for the treatment of uveitis. “We took the systemic approach for this indication, because not all forms of uveitis will respond to local treatment,” explains Grau. “The use of LUVENIQ will allow the reduction in dose of systemic steroids, making this a first-in-class treatment. The clinical data suggest that this treatment could prolong the time to blindness significantly.”

In March 2009, Lux Biosciences completed the recruitment of around 500 patients for the first of two pivotal phase III trials for LUMITECT, a nonerodible cyclosporine A implant for the prevention of rejection in corneal transplantation. The second pivotal trial is planned for the first half of 2010, with potential U.S. and European submissions by the end of 2010.

“In the early days of corneal transplantation, rejection wasn’t expected to be a problem, but it now appears that it can occur rather frequently in around 1/3 of patients. As there is no approved treatment for this indication, we have been granted ‘fast track’ designation in the United States, so we could launch our second product in the states mid-2011, with a European launch about six months later,” says Grau. Follow-up projects still in preclinical and early clinical development, such as LX 214, LX 212, and LX 213, will mean no gaps in the R&D pipeline following launch of the lead products.

LX 214, in phase I/II development for the potential treatment of moderate dry eye syndrome, is a once-daily eyedrop formulation of voclosporin, based on a nanomicellar formulation developed with the University of Missouri. “We feel this formulation is highly original and have filed for patents that will provide us with an unusually long patent coverage. In the initial clinical trials, LX 214 was well-tolerated, with no tissue irritation, and we saw a marked reduction in signs and symptoms in five patients with severe dry eye syndrome,” says Grau. “Despite the intense competitive activity in clinical development for this indication, we have the potential to be the best-in-class treatment for this chronic disorder. This could reach the United States and Europe in 2013 and 2014.”

LX 212, Lux Biosciences’ voclosporin implant, is in preclinical development for the treatment of severe dry eye. The product could also have potential as a second generation to LUMITECT in the prevention of transplant rejection.

As well as solid implants, Lux Biosciences is developing injectable polymers in the form of microspheres that deliver drugs to the back of the eye, based on the families of polymers licensed from Rutgers University. Researchers have designed LX 213 for injection into the vitreous humor, where it will deliver voclosporin over a period to treat the inflammation underlying age-related macular degeneration. This project is still in early research.

“Where local delivery is appropriate, the advantage of our implants and topical products is that they deliver the drug exactly where it needs to be, producing high levels locally, but low or undetectable levels systemically. The added advantage of long-term continuous delivery compared with oral or topical dosing is that it increases patient compliance and may improve the outcome because of the sustained suppression of the immune response,” says Grau.

Raising The Money
Despite the difficult economic climate, Lux Biosciences is well on the way to securing $50 million in series B funding, which will close in the second half of 2011. This is based on the company’s solid progress and sheer hard work so far, according to Grau, and includes financing from its existing investors — HBM Partners, Novo AS, SV Life Sciences, and Prospect Venture Partners. These groups provided $49 million in the series A funding in July 2006. The series B funding is earmarked for the approval and preparation for launch of LUVENIQ.

“With my cofounders at Lux, we originally looked to establish a company in 2001, but the financing wasn’t there, so we all went to Enzon. Eventually in 2005 the opportunity arose, and we successfully raised the money we needed,” says Grau. He adds that having a good team is equally important to having a good portfolio when securing funds.

Working Efficiently
Grau attributes the success of his 23-employee company to efficient organization and well-planned R&D requiring little duplication of preclinical and clinical studies. The company uses a semivirtual model, which relies on outsourcing R&D to CROs, consultants, and other service providers, while experienced senior employees oversee the process and troubleshoot where necessary. This model allows the company to remain flexible and respond quickly to progress and changes in its programs, without expanding too rapidly. As well as its headquarters in Jersey City, NJ, Lux Biosciences has a subsidiary in Germany, which not only helps the company oversee European clinical trials, but provides a more practical time zone to work with CROs in India.

The Impact Of The Financial Downturn
Lux Biosciences has continued to work steadily through the uncertainty of the financial downturn by using its funds efficiently and keeping to its virtual model, outsourcing as required, and carefully selecting products and therapeutic areas. “What has insulated us to some extent against the economic climate? Our access to LUVENIQ, a first-in-class product, our selection of therapeutic areas with significant unmet medical need, and our ability to progress the projects rapidly through important milestones,” says Grau.
In the previous investment market, Lux Biosciences would have been an IPO candidate. “We are constrained by the global lack of access to funding rather than by any lack of ideas. If we had been able to carry out an IPO, we probably would have developed our portfolio and planned for launch differently. However, we have to be mindful of our VCs’ needs. We are fortunate that our investors have supported us all the way through,” says Grau.

Since IPOs are still rare these days, Lux Biosciences, along with many other specialty biopharma companies, is turning to partnering as an alternative option to raise funds. Because there are many smaller companies trying to partner or license out their products and a number of cash-rich larger companies seeking products to fill diminished pipelines, this has created a strong buyer’s market, putting pressure on the smaller biotech start-ups. “This doesn’t seem to have produced the expected increase in number of deals, as cash-rich pharma companies aware of potential financial constraints leverage this strength while looking for exactly the right strategic fit — and are perhaps skeptical of companies unable to raise public or private funding,”Grau says.

By retaining the worldwide rights to the products in its entire pipeline into late-stage clinical development, Lux Biosciences has ensured as high a value as possible if it chooses to partner and kept the flexibility to set up agreements for single or multiple territories or indications. “With the advancement in our development efforts, we are now in a position to talk about partnering, and discussions are ongoing. We will also look to out-license our products and technologies outside our internal development programs and plans,” says Grau. “If we do not pursue a partnership now, we expect to establish one for LUVENIQ once we have secured approval.” The company will also seek a partner for LX 214.

Moving Into The Next Decade
Lux Biosciences’ achievements to date could be regarded as a success story in any financial climate, but especially so in the current economic downturn. However, as with all young companies, Grau and his team need to continue to work hard to maintain their continued accomplishments. “We face the monumental challenge of simultaneous submissions of an NDA (new drug application) and MAA (marketing authorization application) for a new molecular entity. The Lux team has done monumental things before, so we will get this done as well,” says Grau. “Along with everyone else in the industry, we also face the challenges of U.S. healthcare reform and creating products that will be reimbursed by governments and insurance companies. We have tremendous potential to be a revenue-generating, high growth, and sustainable company. Over the next 10 years, we hope to be respected as one of the premier businesses in the ophthalmic field — while still maintaining our current company culture.”