Sorbent Gets $36 Million To Fund Phase II Program In Congestive Heart Failure

With input from new investor Novartis Venture Fund, the biotech will move its lead compound from chronic kidney disease into the potentially more lucrative heart failure space.

Sorbent Therapeutics topped off its Series B financing June 30 with an additional $36 million, which the biotech says will enable it to take lead candidate CLP1001 through a Phase IIa proof-of-concept trial and into the next stage of development if data are promising. Novartis Venture Fund led the round, which totals $53 million including investment from prior backers Sofinnova Ventures, ARCH Venture Partners, CMEA Capital and AgeChem.

A year ago, while still seeking funding for its Phase II program, Sorbent had planned to investigate '1001, an oral polymer that reduces potassium, sodium and fluid from the gastrointestinal tract without entering the patient's bloodstream, in chronic kidney disease, hoping it would demonstrate an ability to make each dialysis session easier for the patient (Also see "Sorbent Seeks A New Path To CV Therapy With Polymeric Drugs" - Pink Sheet, 6 Apr, 2010.).

Then in September, Detlef Albrecht took over the CEO and president's chair, with predecessor Donald Joseph moving to the board of directors. Joseph, formerly president of the renal division at Baxter Healthcare, founded Sorbent and brought in a team that had an initial focus of addressing CKD. That direction scared away some potential investors, who, Albrecht said, were worried about the impact of CMS bundling and other potential price restrictions in the dialysis space.

Multiple Reasons For Switching Indications

Based in Sunnyvale, Calif., Sorbent had planned to test '1001 in heart failure subsequent to the renal indication, but Albrecht determined that for several reasons - investor preference, market size and regulatory pathway - congestive heart failure should be the initial indication for the compound.

"A lot of the venture capital groups are reluctant today to invest into dialysis-based products because of the CMS-related bundling and potential risk of revenue-capping in the future," he said. "Even though it's not clear what's going to happen with innovative products, the outcome is that it has created uncertainty, which investors don't like. When we raised the first portion of this Series B last summer, we clearly heard from VCs that while they like the concept and the product, they were not sure that dialysis was a space that they wanted to invest into."

Based on Sorbent's Cross-Linked Non-Absorbed Polyelectrolyte (CLP) platform, the company's candidates all are based on the potential value of decreasing sodium and fluid levels and either decreasing or increasing potassium. The company believes '1001 will benefit heart failure patients by both ameliorating fluid overload and reducing the risk of hyperkalemia (elevated serum potassium levels) related to the use of multiple RAAS (rennin-angiotensin-aldosterone system) blockers.

In the Phase II study, which recently began enrollment, Sorbent will test '1001 in about 100 heart failure patients with underlying CKD. The biotech hopes to have data early next year for endpoints such as blood pressure, six-minute walk test duration and serum potassium levels.

Albrecht said the company's fundraising goal was to bring enough cash so that it could move "seamlessly" from Phase IIa into the next stages of development. "[This way,] the team wouldn't have to spend another six to nine months on fundraising and lose time in the development cycle," he said. "In terms of being efficient with the time that we have, I always say time is more valuable than dollars."

Novartis Venture Fund was the lead investor in the Series B but did not contribute the entire $36 million included in the top-off. Albrecht would not break down how much each backer invested, but he noted that previous investors ARCH, Sofinnova and CMEA participated. Dow Chemical's venture fund, an original investor in Sorbent, did not participate in the B round but remains a significant investor in the company, Albrecht said.

Concomitant with Novartis Venture Fund's investment, it also placed managing director Markus Goebel on the Sorbent board of directors. Albrecht lauded Goebel's "operational experience in drug development" while at both Roche and Novartis and said he brings Sorbent a "big pharma perspective."

"He has the experience of having worked in those companies, and that could be important from the perspective of who ultimately is going to sell a product like ours or acquire a company like ours, as well as understanding that drug development is tricky and can be a challenge," Albrecht added.

-Joseph Haas ([email protected])