Chlorion Pharma Spinning Out Success

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By Shawn Lawrence

A highly contested topic of late in the life sciences domain is the optimal route of commercialization for research discoveries originating in Canadian universities. Should technologies be spun-out into new start-up entities, or rolled into existing companies? Is it better for early discovery operations to run virtually or through in-house programs?

Count Dr. Jeffrey Coull, president and CEO of Laval-based Chlorion Pharma, among those who advocate for the roll of integrated, non-virtual start-ups.

“I frequently hear people say that it just doesn’t make sense or happen anymore – the idea of a successful university spin-out.

Others question if it is even possible. I keep saying yeah it is and that more people should be doing it, especially here in Canada where there is an abundance of great science,” states Coull. He goes on to cite a recent research report that found that only one metric, of several appraised positively, correlates with research productivity: the number of companies carrying out research.

Naturally, Coull and his co-founders, Drs. Martin Gagnon and Yves De Koninck, have cast Chlorion using this mold.

The spin-out of Université Laval is a venture-backed drug discovery operation focusing on the discovery and advancement of novel therapeutics that equilibrate chloride in the nervous system, and thereby represent novel treatments for neurological disorders.

Based on his experience with Chlorion, Coull opines that the dynamics of success for a company, regardless of whether it is an established player or a spin-out, are the same, beginning with having the right vision, the right strategy, assembling the right team and of course, raising the capital needed in a timely manner.

He stresses, however, that in the case of many early-stage technologies, existing enterprises often have neither the interest nor the wherewithal to make acquisitions from universities, making spin-outs the only viable mechanism of commercialization.

“We spoke to several medium-to-large companies about licensing our platform technology, and the response was always the same: come back and see us once you have proof-of-concept and optimized compounds. Well, we were sure a hell of a long way from having this data, and it quickly became apparent to us and the university that this technology transfer option was not going to fly,” states Coull.

Coull continues, “Like many ventures, Chlorion was borne of necessity in 2004. We truly believed in the potential of our technology to spawn better therapeutics, and needed a vehicle with which to realize this promise.”

The story of Chlorion begins a few years earlier, in 2002, in a neuroscience laboratory at Université Laval. Coull and other members of a research team led by De Koninck, a professor of Psychiatry at the university, were employing electrophysiology techniques to detect changes in the spinal cords of rodents with neuropathic pain, with a particular focus on the movement of chloride, an ion that carries inhibitory charge.

“The majority of investigations on the cellular basis of neuropathic pain and related disorders had focused on alterations to systems that excite neurons through the movement of positively-charged particles (e.g. cations),” Coull states. “We took the opposite approach, evaluating the state of chloride-based inhibitory mechanisms.”

The importance of chloride homeostasis in neurons relates to the function of inhibitory neurotransmission. Namely, the GABA and glycine systems suppress the activity of neurons by effecting small currents of chloride into or out of the cell.

What the research team found, and subsequently published in Nature, was that, due to the dysfunction of a chloride transporter called KCC2, chloride equilibrium was awry in the spinal cords of rodents with neuropathic pain, leading to ineffective inhibitory transmission and ultimately uncontrolled pain transmission neurons.

“Normally, these inhibitory processes in pain pathways form a gate of sorts. Sensory information legitimately related to pain may pass and be transmitted to the perception areas of the brain, whereas signals stemming from light touch, for example, cannot pass through the gate,” Coull elaborates. “The impact of the change in chloride levels is dramatic: essentially it contributes to the unhinging of the gate, and enables the transmission of any and all arriving signals to the pain centers in the brain.”

Coull and his colleagues quickly realized the therapeutic relevance of this finding.

Using various experimental models, they were able to demonstrate that increasing the activity of KCC2, and thereby equilibrating chloride, led to a dramatic reversal of neuropathic pain.

Just prior to publishing the original research papers, De Koninck’s research team and Université Laval filed a number of patent applications protecting their ability to leverage these discoveries to identify and develop novel drugs. On the back of this intellectual property, Chlorion was officially founded in March of 2004 by Coull, De Koninck, and their colleague from McGill University, Dr. Martin Gagnon.

Having failed in their attempts to find a company willing to adopt their newfound technology, the group approached several investors, pitching the idea that therapeutics might one day be derived from the platform.

“Through our early road-show, we learned two things pretty quick: number one, Chlorion did not represent a viable investment opportunity as it existed at that point, and number two, we didn’t have a clue about what we were doing in a corporate, financial sense,” states Coull.

Determined to see their technology developed, the founders hatched a new plan. Coull would take a position at SHI Consulting, a Toronto-based management consulting firm providing advisory services to life sciences companies, while Gagnon and De Koninck would initiate drug discovery efforts using grant funding from the federal CIHR.

At the same time that Coull was learning something about the strategy and operations of Fortune 500 pharmaceutical companies, and Gagnon and De Koninck were moving assay development and high throughput screening forward, the team reached out to a number of American, Canadian and European investors with the hopes of securing initial seed financing to get Chlorion off the ground.

Coull recalls this period as very painstakingly slow. “We spent two years knocking on door after door, with little to show for it. It was quite demoralizing at times.”

Ultimately, the founders were able to attract the interest of three venture capital investors located in Quebec.

“Everything finally came together in summer of 2007. We had identified a few interesting chemical hits, demonstrated that they produced efficacy in pain models, and teamed up with this syndicate of private equity investors for a series A round of $6M,” states Coull.

With its coffers full, Chlorion moved from its temporary home at Université Laval into, ironically, an incubation facility across the province in the city of Laval (a suburb of Montreal) called the Quebec Biotechnology Innovation Centre. The vision at that time was for the company to run as virtually as possible.

“In support of initial lead optimization efforts, assays were to continue to be run in Quebec City, with chemistry and pharmacology out-sourced to various contractors,” recalls Coull.

However, Coull and his colleagues quickly discovered the constraints of this model: “We were spending inordinate amounts of money for simple tests and experiments that needed to be repeated frequently. Additionally, our progress was very slow, as effective project management was difficult to implement. This slow progress translated into increased indirect costs, mostly related to overhead.”

By the end of 2007, it had become clear to the team that it didn’t make sense to out-source drug discovery – at least not in the manner they wanted to carry it out.

Enter Drs. Giorgio Attardo and Irenej Kianicka. An industry-experienced chemist and pharmacologist, respectively, Attardo and Kianicka were brought on as directors and charged with the responsibility of building capacity in medicinal and bioanalytical chemistry, as well as in behavioral pharmacology.

The company rapidly built its team and the rate of progress in lead optimization picked-up considerably.

“With Giorgio’s and Irenej’s help, we were able to hone the chemistry – pharmacology interaction to greatly increase the speed with which a synthesized analog could be screened for activity and potency. We also automated many critical processes, resulting in a significantly reduced cost per sample,” says Coull.

By the autumn of 2008, the company had produced its first, fully optimized drug candidate, CLP290, a small molecule opener of the KCC2 co-transporter that produced strong efficacy in models of neuropathic pain.

Unfortunately, a critical problem with CLP290 was discovered. When given orally at very high doses, the compound was found to be unstable in solution.

“We pulled our hair out trying to improve the formulation of CLP290, however it wasn’t meant to be.”

By early 2009, it was clear to everyone at Chlorion that it was time to go back to the drawing board with drug discovery.

These renewed efforts were largely guided by Dr. Franz Hefti, a former head of neuroscience research at both Merck & Co. and Genentech, which Chlorion was fortunate enough to attract as its chief development officer.

According to Coull, “With Franz on board, our R&D efforts really started to hum, and after the synthesis and evaluation of hundreds of analogs, we identified a real gem in CLP635 as our new development candidate, among other interesting compounds.”

Like CLP290, CLP635 is a potent opener of KCC2 that has shown efficacy in both pain and epilepsy models, and should be in clinical development later this year.

Coull refers to it as an improved pregabalin (Pfizer’s Lyrica®), exhibiting superior efficacy along with a more benign tolerability profile.

“By focusing our therapeutic strategy on a pivotal and specific effector mechanism in the pathophysiology of chronic pain, and implementing a comprehensive, tightly managed optimization program, we have been able to come up with drug candidates that hold significant promise and have attracted significant interest among prospective partners,” he states.

When asked about which partners are interested in Chlorion’s technology, Coull remains tight-lipped. He does allow, however, that Merck has recently added KCC2 to its list of interesting targets published in the annual Areas of Interest catalogue.

Coull understands that despite Chlorion’s success to date, many will continue to question the role for start-ups in the drug development process. He responds to this point, however, not in generalities, but by referring to his own recent experience:

“Look, we were confident from the very start that the platform technology would lend itself well to drug discovery and the identification of treatments that could potentially improve treatment options for patients. However, had we not spun-out Chlorion and undertaken drug discovery on the cheap – there is no doubt in my mind – this concept would languish in an academic journal as a mere curiosity.”