A new model for drug development


Kineta is an unusual biotech company that does not want to get much bigger but wants to make a profit by staying lean and boosting the speed of drug development for others.

With about $40 million in financing, the Seattle startup has five compounds in its pipeline and sells investors on early returns rather than holding on for commercialization. In a kind of “flipping” scenario analogous to real estate investment, Kineta discovers drugs with great potential, remodels them a bit (to get rid of what you might consider, say, the ugly shag carpeting) and then attempts to license the drugs to others for the long, winding road to commercial sales.

This year has been big for Kineta, which has about 30 employees at its South Lake Union headquarters. Results of a small study showed its flagship compound, a peptide known as ShK-186, appeared to fight obesity in mice. In February, a group of oil traders invested in Kineta, praising the company’s nimbleness. “We are genuinely impressed with Kineta’s leadership and laser focus on delivering high-caliber R&D to larger global pharmaceutical companies,” said Jamie Browne, a managing director of Hydra LLC, the investment group.

Charles Magness, CEO, and Shawn Iadonato, EVP and chief scientific officer, created Kineta in 2008 after they partnered a different company to sale. The two scientists with doctorates began their careers in Seattle working on part of the human genome project in the 1990s.

ShK-186 is derived from the venom of a sea anemone, a flower-like creature that stuns its prey. The synthetic version is intended to decrease inflammation by using a specific pathway in the human body. Inflammation is a factor in dozens of chronic human diseases, including arthritis, multiple sclerosis and obesity. Earlier this year, Kineta finished its first human trials to establish the safety of the drug for psoriatic arthritis, a condition made prominent recently by the professional golfer Phil Mickelson. Further human trials involving about 50 people will get started later this year, Iadonato says. The company does basic science at its own labs but partners with other researchers in the United States and Europe to get the human trials done.

On that one pathway, Kineta (website: kinetabio.com) has competitors, including GlaxoSmithKline, Merck and Amgen. Typical drug development is done by a company that finds a prospect, tests it for safety, moves through regulatory hoops to get FDA approval and then markets and sells it. All drugs have to go through a regulatory process requiring specific benchmarks and statistical thresholds.

“In the traditional method of drug

development, an investor does not get any return on investment for 10 years,” Magness notes. “That can’t compete with the internet and device manufacturers who can return something in three years. We need something in biotech that competes with these other industries.”

Kineta is trying to choose excellent drug candidates, speed them through early stages of testing—known as safety trials—and then license them to others for the rest of that slow trip toward commercialization. Kineta will receive both a licensing fee and royalties when any of its drug candidates are sold commercially. The company hasn’t pulled it off yet, but hopes ShK-186 will get licensed soon.

“Our investors know that when we do a transaction,” Iadonato says, “they get a payout.”

Some of the scaffolding of insight about ShK-186 and its potential for treatment of multiple sclerosis, rheumatoid arthritis and other autoimmune diseases like psoriatic arthritis comes from the work of scientific adviser K. Charles Chandy of the University of California at Irvine. Chandy has been exploring the pathways of inflammation for decades. What’s important about ShK-186 is that it appears to dampen inflammation narrowly without shutting down the entire immune system in a way that leaves the person unprotected. Some of the current anti-inflammatory drugs in use today come with warnings that they leave people vulnerable because normal defenses are silenced.

Kineta believes the potential market for psoriatic arthritis alone to be $2.4 billion by 2018. Of course, if the drug gets commercialized for that market, other conditions, such as different forms of arthritis, may become additional target markets.

If Kineta’s first drug gets flipped to

a larger developer, it will prove a principle and allow Kineta to grow and benefit its collaborators. The firm partners with Seattle Children’s Research Institute,

the University of Washington and the Infectious Disease Research Institute, among others.

“Success would mean not only more sustainable growth for us,” says Magness, “but significant business for our supporting [partners in] law, manufacturing and supply—many of whom are in Seattle.”

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