The expanded Series B adds $120 million to the $80 million that ReCode raised in its initial second round last fall. More importantly, the additional financing brings with it more big-name biopharma investors, as the venture capital arms of Bayer and Amgen join those of Pfizer and Sanofi as backers of the company.
“The reason we went back to expand on our B round was to expand and diversify the potential of this platform to new tissue types and new forms of genetic medicines,” ReCode CEO Shehnaaz Suliman, MD, MPhil, told GEN Edge.
“With this fundraising, we now have the ability to target additional tissues, such as the central nervous system and oncology. These allow us to really maximize the potential of this differentiated platform, while at the same time enabling us to get into the clinic with our lead programs.”
The expanded Series B brings ReCode’s total capital raised to $280 million—enough to extend the company’s capital runway another year to the end of 2024. ReCode said the new proceeds will enable it to fund pipeline expansion into as-yet-unspecified central nervous system (CNS), liver, and oncology indications.
The funding will also allow ReCode to advance its PCD and CF programs into the clinic, and further develop its genetic medicine delivery platform to deliver additional treatments—from gene correction modalities and small interfering RNA (siRNA) therapies—to a wider range of target cell types both predictably and programmable.
The financing will also enable ReCode’s planned expansion from a space shared with five other startups to its own 30,000-square-foot facility in Menlo Park, CA, where the company is based, as well as the company’s workforce, which will grow from about 70 people at present to about 100 by year’s end.
ReCode’s planned expansion—which would buck the trend of retrenchment by private biotechs as financing markets have declined over the past year—reflects growing interest in non-viral lipid nanoparticles (LNPs) and other delivery vehicles for targeting cells linked to specific diseases.
A June 10 report by McKinsey & Co. projected that more than 400 RNA-based therapies in development phases will require targeted delivery mechanisms—yet companies specializing in LNP delivery had seen up to that time “relatively small” funding rounds of around $25 million each, around half of the $45 million average deal size for drug delivery companies.
Five lipid approach
ReCode develops genetic medicines based on its own selective organ targeting (SORT) delivery platform—a platform of LNPs designed to deliver treatments with precision, as well as safely and effectively. SORT LNP is an approach to tissue-specific mRNA delivery and gene editing in which LNPs are systematically engineered to exclusively edit extrahepatic tissues and therapeutically relevant cell types.
ReCode licenses SORT LNP technology from the Texas laboratory of Daniel J. Siegwart, PhD, a co-founder of ReCode and scientific advisor to the company. His lab reported the first non-viral system for in vivo CRISPR-Cas gene editing in December 2016. (Siegwart is the W. Ray Wallace Distinguished Chair in Molecular Oncology Research at the University of Texas Southwestern Medical Center, where he is also Director of the Program in Genetic Drug Engineering, Director of the Drug Delivery Program in the Department of Biochemistry, Department of Biomedical Engineering (BME), and Co-leader of the Chemistry and Cancer Program at the Simmons Comprehensive Cancer Center.)
“The current data disclosing the high degree of editing in specific cells positions the discovery of SORT LNPs to treat an array of diseases in a highly accurate manner… SORT may open new avenues of development for gene correction therapeutics,” Siegwart and colleagues concluded in a 2020 study detailing SORT LNP, published in Nature Nanotechnology.
While traditional, first-generation LNPs consist of four lipids and are primarily taken up by the low-density lipoprotein (LDL) receptor in the liver, limiting their usefulness for broad therapeutic applications, SORT LNPs are engineered with five lipids. The fifth is biochemically distinct from the others, which changes how the lipids interact with proteins inside the body—which in turn enables the lipids to be directed and delivered directly to different tissues, organs, and cell types beyond the liver.
“Ours is a five-component system, and the last one can be our choice of lipid,” Angele Maki, PhD, senior vice president and head of business development at ReCode, told GEN earlier this year.
By choosing whether to use an ionizable or charged lipid, Maki said, users of SORT LNP can target the lungs, spleen, or other organs beyond the liver.
Game changer
“Not only can we go to organs of interest, but we can go to specific cell types of interest within those organs,” Suliman said. “This is really a game changer because it means, for example, in the case of a CF patient that is unable to manufacture CFTR protein, that we can deliver the CFTR protein directly via an inhaled formulation into the secretory cells that lack of protein, and show that we’re able to upregulate protein expression by doing that.”
Genetic medicine “cargoes” can be delivered by messenger RNA (mRNA), silent RNA (siRNA), or gene correction modalities. Delivery is even potentially possible with DNA, something precluded when delivery occurs via viral vectors.
“With viral delivery, you rely on HeLa and AGK [acylglycerol kinase], mammalian cell cultures that need to be expanded, that are very expensive that are not really scalable,” Suliman explained. “But non-viral delivery is a synthetic chemical production methodology—there’s just chemistry, not as much biology, and cell culture. This means you can scale up significantly, as has been done with the COVID vaccines, do redosing, keep the cost of goods down. These are just some of the significant advantages that non-viral delivery platforms, such as LNPs have.”
Direct delivery, ReCode reasons, offers improved efficacy and potency over viral delivery methods, while limiting potential adverse effects.
Speaking with GEN Edge last year, Lockhart said, “We chose the LNPs because they are a purely chemical approach. The components can be made with well-defined scalable chemistry. There are no peptide components, no viruses, and nothing that requires a bioreactor.”
ReCode says its use of LNPs has been borne out by the success of the messenger RNA (mRNA)-based COVID-19 vaccines developed by Pfizer and BioNTech as well as by Moderna.
Pipeline progress
Recode’s pipeline is anchored by preclinical inhaled and IV lead programs for CF caused by nonsense mutations, as well as an inhaled treatment for PCD. The CF treatment focuses specifically on the 10–13% of patients who have nonsense mutations that cannot fully benefit from current small molecule therapies.
At the American Thoracic Society (ATS) 2022 International Conference, held in May in San Francisco, ReCode presented positive preclinical data for both programs. The data showed that both the PCD and CF candidates can be precisely delivered directly to disease-relevant cells without significant exposure to other tissue, effectively releasing the encapsulated genetic cargo, and expressing the correct proteins at relevant levels.
“We’ll file the IND for primary ciliary dyskinesia in Q4 of this year, which means that we expect to be enrolling patients in Q1 next year. And the IND filing for CF will happen in the second quarter of next year, which means that we will be enrolling patients in the second half of next year,” Suliman said.
Lockhart said ReCode has shown the recovery of function in the gold-standard human cell model for both PCD and CF.
“In the PCD program, we’ve selected the lead mRNA We selected the lead delivery LNP and we’ve done full dose finding studies with safety and tox readouts. We’ve shown repeat administration in smaller animals and then we’ve done full dose finding in rats and non-human primates,” Lockhart said.
In the CF program, he added, ReCode has optimized the mRNA and drug formulation, and carried out repeated administration studies in mice. That program will also be moving into non-human primates later this year.
ReCode is also focused on developing therapies that deliver genetic cargo by applying gene editing/correction in target cells, including stem cells. The company plans to advance that modality through a collaboration that ReCode intends to launch with a “next-generation gene editing platform company” partner.
“Suffice to say, we have expansive interest from a wide variety of partners, not just on the technology synergy but on the SORT LNP platform itself,” Suliman said. “If you’re a biopharma partner and your interest is, for example, siRNA development, and you think about how to enhance the potency of your siRNA getting to the tissues and cell types of interest, the way to do that is with delivery.”
“We can actually enhance the potency of any genetic cargo by co-packaging that cargo with SORT LNP that will bring the two technologies together in a beautiful confluence of technology synergy,” she added.
Doubling expectations
Suliman joined ReCode in January when she succeeded Lockhart as CEO. Lockhart had been CEO of ReCode’s predecessor TranscripTx from 2014–2020, before he took the helm of ReCode when it was formed through an all-stock merger with TranscripTx. Lockhart oversaw the company’s successful oversubscribed $80 million Series A round, co-led by OrbiMed Advisors and Colt Ventures, with participation from MPM Capital, Vida Ventures, Hunt Technology Ventures, and Osage University Partners.
ReCode initially projected it would add $60 million to the Series B round when it began working to raise the additional capital.
All the original Series A investors were joined in the initial $80 million Series B round by co-leaders Pfizer Ventures and EcoR1 Capital, plus new investors that included Sanofi Ventures, as well as funds managed by Tekla Capital Management LLC, Superstring Capital and NS Investment.
As Suliman related on GEN’s Close to the Edge video series earlier this year, her career began as a physician in her native South Africa, where she received her MD from the University of Cape Town Medical School. She pivoted to investment banking about two decades ago, earning an MBA at Oxford University, then held positions at Lehman Brothers and later Petkevich & Partners.
A few years later, she embarked on a successful career as a biotech business development executive. At Gilead, Suliman held management roles of increasing responsibility between 2005 and 2010 and helped expand the company into new therapeutic areas, notably HIV, through M&A. She then held positions at Genentech and its parent company Roche, as well as at Theravance, where she put together a $1 billion profit-sharing partnership with Johnson & Johnson’s Janssen Biotech for its lead JAK inhibitor program before moving to Alector Therapeutics as president and COO.
“After I joined ReCode, we spent a few months together as a team really updating the strategy and execution plan for the company and for the SORT LNP platform,” Suliman recalled. “We hit the road on the financing in mid-April, and by mid-June, we will fully oversubscribed.”
The expanded Series B was co-led by new investors Leaps by Bayer and AyurMaya, with participation from Amgen Ventures. Alan Colowick, MD, MPH, managing director of Matrix, and Rakhshita Dhar, senior director of Venture investments Health at Leaps by Bayer, have joined ReCode’s Board of Directors.
“We have been incredibly fortunate in a challenging financing environment to connect with really sophisticated and thoughtful investors that understand the importance of following the science and generating good science and, importantly, understanding the importance of successful delivery as the key to unlocking the future of genetic medicine,” Suliman added.
“We really encourage others to stay the course and not give up, because if the science is compelling, the opportunity will be there.”