VentureBeat

Novocell, a San Diego embryonic stem-cell company, raised $25 million in a third round of funding. That’s presumably a bit of a letdown for the company, which had previously hoped to pull in as much as $35 million in the round. I wrote earlier about Novocell’s fundraising here.

The round was led by Johnson & Johnson Development, the venture arm of J&J itself, joined by Sanderling Ventures, Asset Management Company and Pacific Horizon Ventures.

In my earlier piece, I explored whether J&J’s involvement marked the first time that Big Pharma had directly funded an embryonic stem-cell company. It turns out that’s probably true, although J&J’s investment in Novocell dates back to at least 2005, a fact I didn’t learn until a few days after I wrote that post. (I had updated the previous item with that acknowledgement, but the update somehow got lost in WordPress, so I’ll just make the point again here.)

I’ve also heard from some sources that J&J’s interest isn’t so much in stem cells as in a separate Novocell technology for “encapsulating” cells to protect them from immune-system rejection after a transplant. Although that sort of technology might be useful for protecting stem-cell transplants, it’s also got potential utility outside the stem-cell field. For instance, if transplants of insulin-producing pancreatic islet cells ever became feasible as a diabetes treatment, encapsulation might be one way to ensure that the cell transplants “take” without forcing patients onto immunosuppressive drugs for the rest of their lives. (Exactly how to procure a reliable supply of islet cells is a separate problem, since donors and cadavers tend to be in short supply — and that’s where stem cells are likely to enter the picture.)

Novocell, in fact, is currently performing early-stage trials of exactly that sort of therapy, using islet cells procured from cadavers. The encapsulated cells are injected into “tissue pockets” just under the skin of the thighs or the lower abdomen. Last year, the company presented preliminary data from the study in which the cells transplanted into the first two treated diabetics appeared to show early signs of functioning without triggering an immune-rejection response.

Since the study was supposed to include 12 patients who would be monitored for 12 months, new data from that study might not be too far off, which probably helps explain J&J’s interest in leading this new round.

(UPDATED: See below.)

Seattle’s Koronis Pharmaceuticals, a biotech focused on antiviral drugs that cleverly attempt to to drive viruses into extinction, got some serious validation yesterday when it raised $20 million to fund a mid-stage “proof of principle” trial for its leading AIDS drug.

Koronis, which was founded in 1998 to commercialize the pioneering viral research of Larry Loeb, Jim Mullins and John Essigmann, is pursuing a novel and unusual path to defeating viral disease. Most antiviral drugs are designed to prevent viruses like HIV from reproducing themselves, often by gumming up enzymes or proteins that are key to viral replication. HIV protease inhibitors, for instance, are molecules that stick in the craw of a scissors-shaped molecule called HIV protease, which clips certain HIV proteins to an appropriate length. Other AIDS drugs muck up HIV by inhibiting the action of an another viral-replication enzyme called reverse transcriptase. The Achilles heel of all these antiviral strategies, however, is that many viruses reproduce and mutate so quickly that they can quickly grow resistant to any particular drug. That’s why AIDS treatment is typically delivered in a three-drug “cocktail,” because to survive, HIV has to become resistant to all three drugs at the same time — a generally unlikely event.

Koronis, by contrast, has designed drugs that don’t attack HIV directly — in fact, they aim to ensure that the virus will reproduce. The trick here is that the drugs actually amplify HIV’s natural mutation rate to an untenable level. If the drugs work as planned, HIV will mutate so quickly — in other words, producing an enormous number of errors in its genome each time it replicates — that succeeding generations of the virus will eventually be rendered inert. In other words, HIV’s mutations will eventually drive the virus into extinction. Koronis calls this process “viral decay acceleration,” and it’s unquestionably a very cool idea.

For the science-minded among you out there, here’s a base-pairing diagram that illustrates how a Koronis drug called KP-1212 encourages mutations:

The company’s description of the technology is here (warning: it’s pretty dense). The short explanation goes something like this. KP-1212 is structurally similar to a “nucleoside,” which is essentially one of the five DNA/RNA bases (adenine, guanine, cytosine, thymine and uracil) bound to a sugar. In this case, KP-1212 is a nucleoside analogue of cytidine and thymidine.

In ordinary circumstances, HIV — a retrovirus whose genome is encoded in RNA — hijacks cellular machinery to create new RNA versions of itself. When KP-1212 is present, however, it infiltrates HIV’s RNA genome by taking the place of cytidine and thymidine nucleosides. The next time the virus replicates, however, each molecule of KP-1212 will randomly pair with either guanosine, the complement of cytidine, or adenosine, the complement of thymidine.

In other words, each molecule of KP-1212 in HIV genome template has a 50 percent chance of introducing a genetic error into the replicated virus — and this will happen again and again, each time the virus replicates. When enough errors accumulate, the virus should essentially drop dead, an effect that should be mirrored throughout the entire HIV population in the body of an individual taking the drug.

Existing nucleoside-analogue drugs essentially aim to disable reverse transcriptase, although they do so in a way that the virus can eventually mutate to counter. By contrast, HIV should have much more difficulty resisting the viral-decay acceleration strategy, since it affects the virus randomly and continues mutating it as long as the drug is present.

So, the science is nifty, no question. Do the drugs work? That’s much harder to say. Preclinical studies have apparently shown that KP-1461, a cousin of sorts to KP-1212, can “extinguish” HIV — this according to Robert “Chip” Schooley, an eminent AIDS expert at UCSD. I haven’t yet figured out whether that refers to “in vitro” experiments — that is, work in cell cultures — or “in vivo” tests in laboratory animals; the latter would obviously be far more convincing. Koronis hasn’t said much more about its early-stage human trials except that KP-1461 appears to be safe and “well tolerated.”

So stay tuned — I’ll update if I learn more. (If you happen to know more, please let us know in comments.) The drug is now headed into mid-stage trials.

The financing round, Koronis’ fourth, was led by Pacific Horizon Ventures, joined by Asset Management Company.

UPDATE: I’ve rewritten the scientific explanation to make it a little clearer, although it’s still on the dense side if you’re not up on the mechanics of nucleic-acid replication. I also fixed a broken link to the company’s technology description.