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Early Company Evolution – People, Pipeline, and Purse

Early Company Evolution – People, Pipeline, and Purse

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This blog was written by Mark Manfredi, CEO of Kyn Therapeutics, as part of the From The Trenches feature of LifeSciVC.

“Time flies when you’re having fun.” That’s how I feel as I reflect on the first three years of the growth of Kyn Therapeutics. So much has happened since my R&D colleague Michelle Zhang and I moved into the seed space at Atlas Venture (see photo below of our cozy abode) to begin work on Kyn. As a first-time scientifically-trained biotech CEO, I assumed it would be similar to leading a project team in pharma – after all, the company started with only one asset!  Turns out it’s more complex, and there have been many twists and turns along the way.  While you can change focus from day-to-day, no area can be neglected, and don’t even think about choosing the wrong wine for a Board of Directors dinner.

A major component of our evolution at Kyn has been our transformation from a single asset company to an organization with three clinical and near clinical programs as well as a discovery pipeline. What were the triggers that have led us down this path? How did we decide to make this important move? What were the key elements that we believe have contributed to our successful growth? At Kyn we are still early in our company’s history, but I believe there are many relevant dynamics in our evolution to highlight. I share our story and thoughts below.

Once upon a time

At Kyn’s inception, IDO1 was all the rage.  With almost two decades of preclinical validation and initial positive clinical data with epacadostat (IDO1 inhibitor from Incyte) there was a lot of investment in the pathway (e.g., BMS/Flexus, Genentech/NewLink).  Our initial program was a biologics approach (engineered Kynureninase i.e. “Kynase”) that targeted both the IDO and TDO pathways and addressed a biologically relevant resistance mechanism of IDO1 selective inhibition (previous blog here).  The program was still at an early stage in lead optimization when we started Kyn.  Obviously the feeling around IDO1 selective inhibition has evolved since we started the company – more on that later.

Working on a single asset business model requires the dichotomy of belief that the project has the potential to change patients’ lives; with the understanding that generating key data has the potential to “kill” the opportunity.  The challenge is to stay internally motivated knowing this and strive to convince investors to fund the idea while at the same time recruit new talent to join your fledgling company when the next experiment could be the end of the original thesis.

Navigating internal hiccups or changes in the external environment for a small company with a single asset is an art when you have a small team, limited cash, and ambitious investors.

Building the team that can evolve with you

The team you build drives your competitive advantage.  There are many good people in biotech companies, but a highly functioning and effective team is more than just a collection of experienced people.  Early hires are critical as they are a major factor in attracting future employees – talent begets talent, as well as being able to adapt and grow along with the company.

We initially hired seasoned senior executive-level scientists who brought both self-sufficiency and a significant amount of leadership in their discipline.  The early senior hires helped shape projects and company strategy and build our consultant/CRO network.  We began building an internal research team after a year in order to iterate faster and control costs for some of our critical discovery work, including in vivo experiments. This internal research team has been instrumental in the scientific and pipeline advancements Kyn has achieved to date.  Since its inception, Kyn has delivered one program in Phase 1b/2, two additional assets proximal to the clinic, and a high- profile partnership with Celgene. And we did this with 14 full time team members continuing this semi-virtual model!

We supplemented our internal team with ex-large pharma consultants offering decades of valuable experience. We continue to choose those that not only provide a service but who are thought leaders in their discipline. Our consultants are an extension of our team and are empowered with decision making, invited to team building exercises, and are often onsite to mingle with the team. We make it a priority to keep them looped in at all times, not just when they are active on a project. This way, quick re-engagement when necessary is easy and seamless.

As Bruce Booth said in a 2012 blog post, “Make your board work for you.” This is a philosophy that’s served us well and has enabled our successful growth. Our board of directors comprises members with expertise in BD, financing, and R&D, and provide key connections with contacts within industry.  Our close working relationship with the board and their willingness to get their hands dirty with us in every aspect of building the company has fostered a high degree of trust.

From one program to a pipeline

The collaborative relationship with the board was especially helpful when we weighed the decision to build beyond one pipeline project. Our internal team saw several opportunities that we wanted to act on. Based on insights from the kynurenine pathway of our initial project, we became excited about the idea of targeting the aryl hydrocarbon receptor (AHR) with a small-molecule antagonist. That project would become our first homegrown discovery effort. We also saw an opportunity to in-license a clinical asset (EP4 antagonist). These strategic shifts were big undertakings and we needed to build our case thoughtfully and with a lot of conviction. To present our case to the board and investors on why we wanted to target AHR, we developed a clear picture of the development path, asked what the POC trial would look like and “what is the likelihood for a biomarker driven sub-population?” We knew that if we couldn’t answer the first question, then maybe the clinical hypothesis was too early, even if the biology was cool (lesson learned from Raze Therapeutics – here). This process helped us to learn who we are as a company. While some enterprises choose to go with big biology and a longer lead time to a drug candidate – that’s just not us. Our argument gained board approval and investors trusted our team and the plan that we laid out.

Discovering AHR antagonists

AHR agonists demonstrated strong and broad immunosuppression and there is clinical proof-of-concept with a synthetic agonist tapinarof in psoriasis.  Moreover, in cancer, many tumor types had high expression and activation of AHR.  This evidence was the basis for developing an AHR antagonist to stimulate the immune system in cancer.  We drove the project from initiation to development candidate in just 18 months and with approximately $6M in invested capital.  We leveraged the internal and external team to run fast working on the critical cell/in vivo pharmacology and chemistry.  Notably, we had an ace senior chemist doing compound design and leveraging a large medicinal chemistry team at a CRO and deeply experienced translational biologists to position the program for success in the clinic.  Early efficacy work was done in a KOL’s lab, which helped bring external validation with the bulk of the pharmacology and translational work done internally. We will be the first AHR antagonist to enter the clinic in oncology later this year and in indications we selected based on biomarkers demonstrating AHR activation.

Bringing in the EP4 program

Another strategic decision we made was to in-license a clinical asset (EP4 antagonist). EP4 is a receptor within the COX-2 pathway which has strong association with poor disease outcome in cancer.  While COX-2 inhibitors have yet to materialize as commercial therapeutics in oncology, clear clinical benefit has been seen in some patients.  The field had evolved from targeting COX-2 for tumor intrinsic biology to the belief that this pathway was playing an immunosuppressive role through the receptors, most notably EP4.  Also, there was a biomarker-driven approach with COX-2 expression and the metabolite PGE2 being associated with poor outcome in patients.  We were able to leverage the experience of our board and particularly one of our investors who identified the asset through his network and helped with contract negotiation given his deep BD background.  We assembled a clinical team quickly, leveraging consultants and internal clinical operations.  Within nine months from in-licensing we were dosing our first patient with our EP4 antagonist (ARY-007) in a Phase 1b/2 oncology trial focused on two indications in the checkpoint resistant setting.  This included making drug product, establishing a collaboration with Merck for Keytruda (free drug supply contract), and getting the clinical sites running.  This catapulted us to a clinical staged company, which has had benefits beyond the program.  We invested in clinical and translational capabilities and established KOL networks that have been leveraged for our earlier programs.  It has also made the organization more mindful of clinical questions in early programs.

Financing a long-term leading oncology company

Building a “forever” biotech company takes sustainable capital and timing is everything.  Unlike many larger companies, we are continually asking the question, “is this program financeable from an investor perspective?”  New programs, emerging data from existing programs, and, importantly, external data can influence your thesis and your value proposition, for better or worse, as we found out last year.

In the spring of 2018, the ECHO-301 IDO trial data was made public:  IDO1 inhibition added zero benefit to anti-PD1 treatment in melanoma.  Though we had both data and strategy that significantly differentiated our kynureninase and AHR programs from IDO1 selective inhibition, the epacadostat phase 3 data cast a shadow over the pathway being therapeutically relevant in cancer.  There is an existential question to be addressed when these events happen. The board met shortly after the readout and we all contributed to a healthy debate (no, really!). We could have shelved these programs but decided instead to stand by our science in this moment of industry doubt. And it paid off.

That summer, we began considering financing options with either a traditional series B or through a strategic partnership. Before embarking on an outreach campaign, we took the time to repackage our pitch to get ahead of the IDO story. Another piece of advice: scenario plan and optimize the message to the best of your ability.  While we had the EP4 project (months from the clinic), the headwinds we hit with the outside investment community as a result of the ECHO-301 trial were significant.  The industry as a whole was reeling from this study – not just for this pathway but for immuno-oncology in general.  Most VCs (outside of our current investors) liked our story but some were hesitant to get into the “tainted” IDO space.  They fell into two categories: those that heard we worked on the IDO pathway and decided immediately they were not interested; and others, more scientifically minded, who wanted to understand our differentiation.

On the partnering side, pharma had two decades of data supporting this pathway in oncology and believed in our package supporting our therapeutic differentiation from the IDO story.  While external influences created some bumps in the road, we entered into a global strategic collaboration with Celgene on the Kynureninase and AHR antagonist programs.  This brought in significant non-dilutive capital to fund these programs through phase 1b (with significant upside if successful) and the ability to further support our EP4 clinical asset and expand our pipeline with new discovery programs.  This was transformative for us.

At Kyn, we are just getting started. We are committed to building a leading translational-driven oncology biotech company.  I can’t say I know exactly where we will be five years from now, but I am confident that armed with a defined strategic plan, built on investments in the best intellectual capital and synergistic relationships, we will succeed in our endeavor to develop truly innovative cancer therapies while maintaining the open-mindedness and agility that has defined Kyn’s corporate philosophy since our inception.

The post Early Company Evolution – People, Pipeline, and Purse appeared first on LifeSciVC.

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Key shipping company files for Chapter 11 bankruptcy

The Illinois-based general freight trucking company filed for Chapter 11 bankruptcy to reorganize.

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The U.S. trucking industry has had a difficult beginning of the year for 2024 with several logistics companies filing for bankruptcy to seek either a Chapter 7 liquidation or Chapter 11 reorganization.

The Covid-19 pandemic caused a lot of supply chain issues for logistics companies and also created a shortage of truck drivers as many left the business for other occupations. Shipping companies, in the meantime, have had extreme difficulty recruiting new drivers for thousands of unfilled jobs.

Related: Tesla rival’s filing reveals Chapter 11 bankruptcy is possible

Freight forwarder company Boateng Logistics joined a growing list of shipping companies that permanently shuttered their businesses as the firm on Feb. 22 filed for Chapter 7 bankruptcy with plans to liquidate.

The Carlsbad, Calif., logistics company filed its petition in the U.S. Bankruptcy Court for the Southern District of California listing assets up to $50,000 and and $1 million to $10 million in liabilities. Court papers said it owed millions of dollars in liabilities to trucking, logistics and factoring companies. The company filed bankruptcy before any creditors could take legal action.

Lawsuits force companies to liquidate in bankruptcy

Lawsuits, however, can force companies to file bankruptcy, which was the case for J.J. & Sons Logistics of Clint, Texas, which on Jan. 22 filed for Chapter 7 liquidation in the U.S. Bankruptcy Court for the Western District of Texas. The company filed bankruptcy four days before the scheduled start of a trial for a wrongful death lawsuit filed by the family of a former company truck driver who had died from drowning in 2016.

California-based logistics company Wise Choice Trans Corp. shut down operations and filed for Chapter 7 liquidation on Jan. 4 in the U.S. Bankruptcy Court for the Northern District of California, listing $1 million to $10 million in assets and liabilities.

The Hayward, Calif., third-party logistics company, founded in 2009, provided final mile, less-than-truckload and full truckload services, as well as warehouse and fulfillment services in the San Francisco Bay Area.

The Chapter 7 filing also implemented an automatic stay against all legal proceedings, as the company listed its involvement in four legal actions that were ongoing or concluded. Court papers reportedly did not list amounts for damages.

In some cases, debtors don't have to take a drastic action, such as a liquidation, and can instead file a Chapter 11 reorganization.

Truck shipping products.

Shutterstock

Nationwide Cargo seeks to reorganize its business

Nationwide Cargo Inc., a general freight trucking company that also hauls fresh produce and meat, filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Northern District of Illinois with plans to reorganize its business.

The East Dundee, Ill., shipping company listed $1 million to $10 million in assets and $10 million to $50 million in liabilities in its petition and said funds will not be available to pay unsecured creditors. The company operates with 183 trucks and 171 drivers, FreightWaves reported.

Nationwide Cargo's three largest secured creditors in the petition were Equify Financial LLC (owed about $3.5 million,) Commercial Credit Group (owed about $1.8 million) and Continental Bank NA (owed about $676,000.)

The shipping company reported gross revenue of about $34 million in 2022 and about $40 million in 2023.  From Jan. 1 until its petition date, the company generated $9.3 million in gross revenue.

Related: Veteran fund manager picks favorite stocks for 2024

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Key shipping company files Chapter 11 bankruptcy

The Illinois-based general freight trucking company filed for Chapter 11 bankruptcy to reorganize.

Published

on

The U.S. trucking industry has had a difficult beginning of the year for 2024 with several logistics companies filing for bankruptcy to seek either a Chapter 7 liquidation or Chapter 11 reorganization.

The Covid-19 pandemic caused a lot of supply chain issues for logistics companies and also created a shortage of truck drivers as many left the business for other occupations. Shipping companies, in the meantime, have had extreme difficulty recruiting new drivers for thousands of unfilled jobs.

Related: Tesla rival’s filing reveals Chapter 11 bankruptcy is possible

Freight forwarder company Boateng Logistics joined a growing list of shipping companies that permanently shuttered their businesses as the firm on Feb. 22 filed for Chapter 7 bankruptcy with plans to liquidate.

The Carlsbad, Calif., logistics company filed its petition in the U.S. Bankruptcy Court for the Southern District of California listing assets up to $50,000 and and $1 million to $10 million in liabilities. Court papers said it owed millions of dollars in liabilities to trucking, logistics and factoring companies. The company filed bankruptcy before any creditors could take legal action.

Lawsuits force companies to liquidate in bankruptcy

Lawsuits, however, can force companies to file bankruptcy, which was the case for J.J. & Sons Logistics of Clint, Texas, which on Jan. 22 filed for Chapter 7 liquidation in the U.S. Bankruptcy Court for the Western District of Texas. The company filed bankruptcy four days before the scheduled start of a trial for a wrongful death lawsuit filed by the family of a former company truck driver who had died from drowning in 2016.

California-based logistics company Wise Choice Trans Corp. shut down operations and filed for Chapter 7 liquidation on Jan. 4 in the U.S. Bankruptcy Court for the Northern District of California, listing $1 million to $10 million in assets and liabilities.

The Hayward, Calif., third-party logistics company, founded in 2009, provided final mile, less-than-truckload and full truckload services, as well as warehouse and fulfillment services in the San Francisco Bay Area.

The Chapter 7 filing also implemented an automatic stay against all legal proceedings, as the company listed its involvement in four legal actions that were ongoing or concluded. Court papers reportedly did not list amounts for damages.

In some cases, debtors don't have to take a drastic action, such as a liquidation, and can instead file a Chapter 11 reorganization.

Truck shipping products.

Shutterstock

Nationwide Cargo seeks to reorganize its business

Nationwide Cargo Inc., a general freight trucking company that also hauls fresh produce and meat, filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Northern District of Illinois with plans to reorganize its business.

The East Dundee, Ill., shipping company listed $1 million to $10 million in assets and $10 million to $50 million in liabilities in its petition and said funds will not be available to pay unsecured creditors. The company operates with 183 trucks and 171 drivers, FreightWaves reported.

Nationwide Cargo's three largest secured creditors in the petition were Equify Financial LLC (owed about $3.5 million,) Commercial Credit Group (owed about $1.8 million) and Continental Bank NA (owed about $676,000.)

The shipping company reported gross revenue of about $34 million in 2022 and about $40 million in 2023.  From Jan. 1 until its petition date, the company generated $9.3 million in gross revenue.

Related: Veteran fund manager picks favorite stocks for 2024

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Tight inventory and frustrated buyers challenge agents in Virginia

With inventory a little more than half of what it was pre-pandemic, agents are struggling to find homes for clients in Virginia.

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No matter where you are in the state, real estate agents in Virginia are facing low inventory conditions that are creating frustrating scenarios for their buyers.

“I think people are getting used to the interest rates where they are now, but there is just a huge lack of inventory,” said Chelsea Newcomb, a RE/MAX Realty Specialists agent based in Charlottesville. “I have buyers that are looking, but to find a house that you love enough to pay a high price for — and to be at over a 6.5% interest rate — it’s just a little bit harder to find something.”

Newcomb said that interest rates and higher prices, which have risen by more than $100,000 since March 2020, according to data from Altos Research, have caused her clients to be pickier when selecting a home.

“When rates and prices were lower, people were more willing to compromise,” Newcomb said.

Out in Wise, Virginia, near the westernmost tip of the state, RE/MAX Cavaliers agent Brett Tiller and his clients are also struggling to find suitable properties.

“The thing that really stands out, especially compared to two years ago, is the lack of quality listings,” Tiller said. “The slightly more upscale single-family listings for move-up buyers with children looking for their forever home just aren’t coming on the market right now, and demand is still very high.”

Statewide, Virginia had a 90-day average of 8,068 active single-family listings as of March 8, 2024, down from 14,471 single-family listings in early March 2020 at the onset of the COVID-19 pandemic, according to Altos Research. That represents a decrease of 44%.

Virginia-Inventory-Line-Chart-Virginia-90-day-Single-Family

In Newcomb’s base metro area of Charlottesville, there were an average of only 277 active single-family listings during the same recent 90-day period, compared to 892 at the onset of the pandemic. In Wise County, there were only 56 listings.

Due to the demand from move-up buyers in Tiller’s area, the average days on market for homes with a median price of roughly $190,000 was just 17 days as of early March 2024.

“For the right home, which is rare to find right now, we are still seeing multiple offers,” Tiller said. “The demand is the same right now as it was during the heart of the pandemic.”

According to Tiller, the tight inventory has caused homebuyers to spend up to six months searching for their new property, roughly double the time it took prior to the pandemic.

For Matt Salway in the Virginia Beach metro area, the tight inventory conditions are creating a rather hot market.

“Depending on where you are in the area, your listing could have 15 offers in two days,” the agent for Iron Valley Real Estate Hampton Roads | Virginia Beach said. “It has been crazy competition for most of Virginia Beach, and Norfolk is pretty hot too, especially for anything under $400,000.”

According to Altos Research, the Virginia Beach-Norfolk-Newport News housing market had a seven-day average Market Action Index score of 52.44 as of March 14, making it the seventh hottest housing market in the country. Altos considers any Market Action Index score above 30 to be indicative of a seller’s market.

Virginia-Beach-Metro-Area-Market-Action-Index-Line-Chart-Virginia-Beach-Norfolk-Newport-News-VA-NC-90-day-Single-Family

Further up the coastline on the vacation destination of Chincoteague Island, Long & Foster agent Meghan O. Clarkson is also seeing a decent amount of competition despite higher prices and interest rates.

“People are taking their time to actually come see things now instead of buying site unseen, and occasionally we see some seller concessions, but the traffic and the demand is still there; you might just work a little longer with people because we don’t have anything for sale,” Clarkson said.

“I’m busy and constantly have appointments, but the underlying frenzy from the height of the pandemic has gone away, but I think it is because we have just gotten used to it.”

While much of the demand that Clarkson’s market faces is for vacation homes and from retirees looking for a scenic spot to retire, a large portion of the demand in Salway’s market comes from military personnel and civilians working under government contracts.

“We have over a dozen military bases here, plus a bunch of shipyards, so the closer you get to all of those bases, the easier it is to sell a home and the faster the sale happens,” Salway said.

Due to this, Salway said that existing-home inventory typically does not come on the market unless an employment contract ends or the owner is reassigned to a different base, which is currently contributing to the tight inventory situation in his market.

Things are a bit different for Tiller and Newcomb, who are seeing a decent number of buyers from other, more expensive parts of the state.

“One of the crazy things about Louisa and Goochland, which are kind of like suburbs on the western side of Richmond, is that they are growing like crazy,” Newcomb said. “A lot of people are coming in from Northern Virginia because they can work remotely now.”

With a Market Action Index score of 50, it is easy to see why people are leaving the Washington-Arlington-Alexandria market for the Charlottesville market, which has an index score of 41.

In addition, the 90-day average median list price in Charlottesville is $585,000 compared to $729,900 in the D.C. area, which Newcomb said is also luring many Virginia homebuyers to move further south.

Median-Price-D.C.-vs.-Charlottesville-Line-Chart-90-day-Single-Family

“They are very accustomed to higher prices, so they are super impressed with the prices we offer here in the central Virginia area,” Newcomb said.

For local buyers, Newcomb said this means they are frequently being outbid or outpriced.

“A couple who is local to the area and has been here their whole life, they are just now starting to get their mind wrapped around the fact that you can’t get a house for $200,000 anymore,” Newcomb said.

As the year heads closer to spring, triggering the start of the prime homebuying season, agents in Virginia feel optimistic about the market.

“We are seeing seasonal trends like we did up through 2019,” Clarkson said. “The market kind of soft launched around President’s Day and it is still building, but I expect it to pick right back up and be in full swing by Easter like it always used to.”

But while they are confident in demand, questions still remain about whether there will be enough inventory to support even more homebuyers entering the market.

“I have a lot of buyers starting to come off the sidelines, but in my office, I also have a lot of people who are going to list their house in the next two to three weeks now that the weather is starting to break,” Newcomb said. “I think we are going to have a good spring and summer.”

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