Nexo allies with MD Anderson in pursuit of covalent cancer drugs
26 Jul 2023
Executive Change
Nexo Therapeutics, a new covalent drug startup, said Wednesday it raised $60 million and unveiled a five-year research partnership with the University of Texas MD Anderson Cancer CenterCancer Center.
Backed by Versant Ventures, New Enterprise Associates and Cormorant Asset Management, the biotechnology company was co-founded by Andrew Phillips, the former CEO of cancer drug developer C4 Therapeutics.
Phillips left C4 in 2020 and joined Cormorant, where he worked with later-stage biotechs. But he wanted to return to the startup world and was drawn to the idea of building a company around covalent drugs, or medicines that firmly lock onto their targets.
Nexo, which in Portuguese means “connection,” is “at the intersection of emerging science, drug discovery, academia and biotech, where we think we can create value,” Phillips said.
The company said its technology can better identify promising compounds, particularly against targets that historically haven’t been easy to reach with covalent drugs.
Typically, these medicines bind in some fashion to the amino acid cysteine on their target protein. But cysteine isn’t always present or easy to aim at, limiting how covalent drugs can be deployed. Scientists at Nexo believed their technology could help them move beyond cysteine-based binding.
Those strong bonds can mean a more potent drug effect, but they also increase the challenge of finding the right target as well as raise the risk of more serious side effects.
In recent years, pharmaceutical firms such as AbbVie and AstraZeneca have had success with covalent drugs for cancer, like Imbruvica and Tagrisso.
Startups have joined in, too, with young biotechs like Matchpoint Therapeutics, Terremoto Biosciences, Enlaza Therapeutics and now Nexo raising sizable funding rounds of late.
Joining Phillips on Nexo’s leadership team are several of his former colleagues from C4, including Joe Patel, a former executive at Treeline Biosciences, and John Athanosopoulos, who oversaw operations at Jnana Therapeutics and Proteovant Therapeutics.
The collaboration with MD Anderson gives Nexo access to the Houston-based research center’s tumor models and clinical knowledge.
“It’s hard to build 100 years of institutional knowledge when you’re a startup, so that’s what we get from making that partnership,” Rizzuto said.
Recently, biotech investors appeared to have cooled on oncology biotechs. Only 10 cancer drugmakers have priced initial public offerings over the past two years, compared to nearly 90 in the two years prior, according to BioPharma Dive data.
“The pendulum has swung in terms of investor appetite,” Rizzuto said. The fallout from the Inflation Reduction Act has also made investors “second guess” their usual investments in oncology, he added.
The $60 million Nexo raised in its Series A round will help them identify at least one drug candidate, the company said.
“By the time Nexo needs to raise more capital, the pendulum may have come back a bit,” Rizzuto said.
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