Dragonfly Therapeutics, Inc.

Diagonal Therapeutics is building a pipeline of antibody agonists rather than receptor blockers. Diagonal Therapeutics is taking shape, launching with $128 million and backed by the likes of BVF Partners, Atlas Venture and RA Capital to develop a pipeline of antibody agonists.  The company will use this significant financial firepower to accelerate development of its pipeline of four assets. Two of these candidates are more advanced, including a lead asset targeting the inherited bleeding disorder hereditary hemorrhagic telangiectasia (HHT) and a runner-up designed to treat pulmonary arterial hypertension (PAH).  Unlike conventional antibody development, Diagonal is working on candidates that activate broken signaling pathways rather than inhibit them. The HHT asset, for example, reignites a receptor in the TGF-β superfamily, with preclinical models showing that the agonist antibodies “prevent and reverse the formation of pathological vascular malformations,” the company said in a release. The $128 million will pay for at least a proof-of-concept study for the HHT program, the company noted in its announcement, though a full cash runway was not specified.  Diagonal is led by CEO Alex Lugovskoy, Ph.D., an entrepreneur-in-residence at Atlas who’s had previous C-suite stints at Dragonfly Therapeutics and Morphic Therapeutic. Diagonal's platform is the byproduct of computational and scientific advancements made in the last five to 10 years, Lugovskoy told Fierce Biotech. “I think more and more people will start using those types of approaches to all kinds of antibody engineering techniques, which is a blend of experimental and computational,” the CEO said in an interview. Diagonal’s stated PAH ambitions come days after Merck & Co.’s much-hyped Winrevair (sotatercept) received FDA approval for the condition, resetting the competitive landscape. Lugovskoy conceded that unlike HHT, which lacks treatment options, Winrevair is a “significant advance” for PAH patients. But he said that because the drug acts as an activin receptor ligand trap rather than a fix for genetic mutations, the worst case scenario for Diagonal is that its own candidate—if approved—is synergistic on the marketplace.  “I do not see us directly competing with sotatercept because what we are doing is promoting missing signaling, whereas [Merck is] inhibiting excessive activin signaling,” Lugovskoy said. Diagonal has a good sense of Winrevair's capabilities, with Acceleron's former vice president of biology, Patrick Andre, Ph.D., now Diagonal's chief scientific officer. Merck got hold of Winrevair when it acquired Acceleron for $11.5 billion in 2021.  Equipped with new cash, Lugovskoy expects Diagonal will grow its head count in the single digits, with most of the new jobs centered on building clinical capabilities. 

Pictured: Illustration of an antibody on blue background/iStock, peterschreiber.media Atlas Ventures unveiled a new Cambridge-based biotech Wednesday with $128 million in funding. The venture capital firm co-founded Diagonal Therapeutics to develop a new approach to agonist antibodies for the treatment of rare diseases. Atlas, along with CEO Alex Lugovskoy, seeded and co-founded the biotech in 2022, with additional startup funds from Lightspeed Venture Partners and Velosity Capital. Lugovskoy was previously chief operating officer at Dragonfly Therapeutics and worked in Biogen’s drug discovery division, in addition to additional leadership roles at other companies. Diagonal’s Series A was fronted by BVF Partners and Atlas, with participation from half a dozen other VC funds. While most currently approved antibodies inhibit cellular function, agonist antibodies activate a broken signaling cascade in the cells to tackle the underlying causes of disease, according to Diagonal. “We are fundamentally changing how agonist antibody therapies are developed,” Lugovskoy said in a statement. Diagonal’s platform marries computational and experimental techniques to home in on the right combination of binding sites between receptor and antibody, a factor the company notes has been historically challenging. Diagonal’s lead program aims to treat hereditary hemorrhagic telangiectasia (HHT), a severe bleeding disorder with limited treatment options. The agonist antibody in development is designed to activate the receptor genetically impaired in HHT patients. Left untreated, it can lead to lung and brain hemorrhage, stroke, heart failure and death. Preclinical models suggest the candidate can prevent and reverse the enlargements and tangles of veins and arteries that can occur, according to Diagonal's announcement. Two more programs in discovery and preclinical development target pulmonary arterial hypertension (PAH) and solid tumors, respectively. The PAH community scored a victory last week when the FDA approved Merck’s Winrevair, the first activin signaling inhibitor therapy for the condition. Merck acquired the drug in its $11.5 billion acquisition of Acceleron Pharma in 2021. The market for PAH therapies was valued at $7.66 billion in 2023. For Diagonal, the Series A funds will advance the HHT program through clinical proof-of-concept and assist with the development of multiple others, including the PAH program, a company representative told BioSpace in an email. Kate Goodwin is a freelance life science writer based in Des Moines, Iowa. She can be reached at kate.goodwin@biospace.com and on LinkedIn.

Its agreement with Xilio Therapeutics moves Gilead Sciences into a space that some of its peers have entered and exited in recent years. Gilead Sciences is bucking the trend in IL-12, handing Xilio Therapeutics $43.5 million upfront to get into the space after seeing rivals such as AstraZeneca and Bristol Myers Squibb retreat from the cytokine. Xilio shared the news alongside details of plans to pull back from another program and lay off 21% of its staff. The Xilio deal gives Gilead a global license to develop and commercialize XTX301, Xilio’s tumor-activated IL-12. Like its sibling IL-2, the cytokine is a potentially potent immunotherapy, but efforts to realize that promise have repeatedly run into setbacks. Drug developers have come up with a range of ways to try to address the toxicity and half-life problems but are yet to deliver an approved IL-12 product. Xilio’s attempt to crack the challenge rests on the addition of domains for masking and half-life extension to IL-12. Coupled to the domains, IL-12 could travel harmlessly around the body until it enters the tumor microenvironment, where an enzyme removes both add-ons and thereby activates the cytokine. The biotech is putting that idea to the test in a phase 1 clinical trial. Patients with advanced solid tumors are receiving XTX301 every three weeks. In January, the biotech told investors the drug was generally well tolerated into the third dose level, with no dose-limiting toxicities, and committed to providing safety, pharmacokinetic and pharmacodynamic data in the second half of 2024.  Gilead has made its move ahead of the data drop, handing Xilio $30 million in cash and investing $13.5 million in the biotech in return for an exclusive global license. Xilio is responsible for running the phase 1 trial through dose escalation. Once Gilead receives the data package, it can choose to pay $75 million to take responsibility for further development. By the time Gilead makes that decision, Xilio could have received up to $29 million more from the Big Biotech in the form of additional equity investments and a development milestone payment. The fees are part of a package of milestones and investments worth up to $604 million. Shares in Xilio, which have languished below $1 this year, shot up by more than 200% in the wake of the update to exceed $2.  The agreement moves Gilead into a space that some of its peers have entered and exited in recent years. Across two updates in 2022 and 2023, AstraZeneca dropped a Moderna-partnered mRNA prospect that encodes for IL-12 and axed an oncolytic viral agent engineered to include a transgene-encoding IL-12. In between those events, BMS returned the rights to Dragonfly Therapeutics’ IL-12 therapy. Dragonfly is continuing to study its IL-12 candidate in a phase 1/2 trial, making it part of a pack of drug developers that have kept the faith in the cytokine. The pack includes Cullinan Oncology, Philogen, PDS Biotech, Sonnet BioTherapeutics and Xencor. Gilead is poised to take the baton from Xilio and carry XTX301 through the rest of the race against those rivals. The transfer will leave Xilio focused on its CTLA-4 prospect XTX101, phase 2 data on which are due later this year. Xilio has a third clinical-phase asset, the IL-2 candidate XTX202, but it has decided to stop investing in monotherapy development. Xilio disclosed the decision alongside new phase 2 data on XTX202 in patients with kidney cancer and melanoma. Stable disease continued to be the best response, leading the biotech to “explore strategic opportunities” for further development in combinations. With its focus narrowing, Xilio is parting ways with 15 employees, representing a 21% reduction of its workforce.