Relypsa Adds Venture Funds In Another Effort To Reach Phase III

Relypsa, spun out from Amgen in 2007, has raised a third round of financing in an effort to move its lead compound into late-stage development.

Relypsa Inc. has tapped venture investors for a third round of financing in an effort to bring its lead candidate through late-stage trials – the same goal it had when it raised $70 million in Series B financing in September 2010.

The company revealed through a Securities & Exchange Commission filing Aug. 10 that it raised $49.7 million in a Series C round that eventually could bring in as much as $80 million. The capital will provide Relypsa with enough cash to operate through the end of 2014. The company has raised about $113 million in previous rounds of financing that included investments from OrbiMed Advisors LLC, New Leaf Venture Partners, 5AM Ventures, Delphi Ventures, Sprout Group and Mediphase Venture Partners.

“It’s quite a feat. We’ve taken a preclinical asset and in five years moved it within a year of filing,” said Relypsa President Gerritt Klaerner.

The money raised so far has been used to advance Relypsa’s lead compound, RLY-5016, a potassium-binding agent intended to mitigate potentially deadly side effects from low blood pressure medicine and drugs to treat other disease conditions like diabetes and chronic kidney disease. RLY-5016 is a binding polymer that stays in the gastrointestinal tract and absorbs excess potassium, potentially eliminating harsh side effects from certain drugs before they reach the bloodstream.

One patient population that could benefit are people taking blood pressure-lowering angiotensin-converting enzyme (ACE) inhibitors and angiotensin receptor blockers (ARBs) who discontinue therapy because of abnormally high levels of potassium in the bloodstream. An acute buildup of potassium is called hyperkalemia and can lead to arrhythmia or cardiac arrest.

RLY-5016 has been tested in five clinical trials since entering the clinic in 2008 and currently is in a 300-patient, year-long Phase IIb trial for the treatment of diabetic nephropathy. Data from the ongoing trial are expected to be presented later this year. Two Phase III trials are expected to start in early 2013.

The company plans to file for an NDA by the end of 2013 and will commercialize the drug on its own using a small specialty sales force targeting nephrologists, Klaerner said in an interview.

Relypsa is the reincarnation of Ilypsa Inc., a company bought by Amgen Inc. in 2007 for its lead compound, a drug aimed at removing excessive phosphate in chronic kidney disease patients. After paying $420 million for Ilypsa, Amgen spun out the remaining four preclinical compounds into the company that became Relypsa; Ilypsa’s previous management team has overseen the business. Amgen took an equity stake in the company, less than 20%, when it was spun out.

Though management is pleased with RLY-5016’s development timeline, it appears to be tracking behind original expectations. In 2007, at the time the company was formed, management was aiming to advance RLY-5016 into Phase III trials within 18 to 24 months. Later, upon the Series B raise in 2010, the company said those funds would be used to take the compound through Phase III (Also see "Biotech Ventures Forth: Third Rock Rolls Out $426M Fund, Relypsa Reloads" - Pink Sheet, 13 Sep, 2010.).

Amgen later shelved the phosphate binder it acquired in the Ilypsa transaction, renamed AMG-223, due to disappointing Phase II efficacy data (Also see "Amgen, Ilypsa Spin Out Relypsa To Further Cardiovascular, Renal Pipeline" - Pink Sheet, 30 Oct, 2007.). The drug was meant to be a competitor of Genzyme Corp.'s leading U.S. phosphate binder sevelamer (Renagel/Renvela), which is set to face generic competition as soon as 2013. Amgen revealed to investors in 2009 that AMG-233 was not worth pursuing because it did not offer superior efficacy to the drugs currently on the market (Also see "Amgen’s Phosphate Binder Loss May Be Genzyme’s Gain" - Pink Sheet, 28 Jan, 2009.).