Tale of Two Clusters

As biotech companies continue to crop up and flourish in the Valley area, it’s clear that the Conejo and Santa Clarita valleys are hotspots for very different sectors of the industry. It’s a tale of two clusters, really, with Conejo’s startups focused on drug development, thanks to the influence of pharma giant Amgen Inc. in Thousand Oaks, while Santa Clarita biotechs deal more in medical devices, a direct result of companies started by billionaire inventor Alfred Mann, credited with founding local medical device companies including Second Sight Medical Products Inc. and Advanced Bionics. Existing cornerstone companies provide the talent, and in the case of Valencia’s Alfred Mann Foundation, a place to conduct R&D until fledgling companies are able to get sizable funding. Companies like PercuSense, which is developing a medical implant for glucose monitoring and early sepsis detection, is one such company that started in the foundation’s incubator program and has recently received a government grant for its device. Venture capital firms such as Westlake Village BioPartners coming on the scene in 2018 also helps local startups, but with market uncertainty brought on by global spread of COVID-19, growth may be brought to a lull for at least six months, according to Dr. Robert Greenberg, chairman of the Al Mann Foundation. “In the coming years, I think there will be a lot of interesting work coming out of the Valley,” said Greenberg. “Until COVID-19, there was growing investment in startups. I’m sure it’s going to take a step back with the volatility in the market, but for us that’s OK. It’s going to be a time where we’re going to step up and support some of these folks.” “We’ll see what this does to things,” added Brent Reinke, founder and chairman of the Bioscience Alliance in Conejo Valley, while discussing coronavirus fallout. “I know when I started BioScience Alliance back in 2007, when we hit 2008 it had a terrible effect. Of course, it was barely in its infancy back then so you have a lot more activity now. It may slow it down a bit, but I don’t think it will disrupt what’s already going on.” Greenberg’s advice to startups: Conserve capital, cut back on staff if necessary, and prepare for clinical trials to be disrupted. Or, Reinke added, adjust pipeline development depending on what a company was researching before. “I know Mike Castagna, with MannKind, developed a relationship with a company to see if there’s a way for them to use their platform to deliver what might be a coronavirus drug. They’re pivoted just a little bit because of the issue,” said Reinke. Westlake Village’s MannKind Corp. announced earlier this month it would focus pipeline efforts on respiratory viral infections like coronavirus. This Special Report features profiles on several of the most promising companies from clusters in the Conejo and Santa Clarita valleys. Santa Clarita ‌PercuSense Year‌ ‌Founded:‌ ‌2016 CEO:‌ ‌Brian Kannard Headquarters:‌ ‌Valencia Focus:‌ ‌Medical device for continuous monitoring of chronic, acute diseases Employees:‌ ‌‌8 Notable:‌ ‌Recently received $4.6 million contract with the Department of Defense PercuSense, a medical device company focused on continuous monitoring of chronic and acute diseases, has developed a minimally invasive sensor designed to sit just under the skin where changes in the body can be detected. The team, led by Brian Kannard as chief executive, is working on allowing the sensor to monitor glucose and ketones in diabetes, and oxygen and glucose in sepsis, as well as other hospital conditions. “Much of our team saw this first-hand, working on continuous glucose monitors, which have seen tremendous growth by essentially enabling better use of insulin through automated delivery,” Kannard said in an email to the Business Journal. The company in February received a two-year, $4.6 million contract with the Department of Defense to develop a wearable sensor capable of detecting the early signs of chemical warfare exposure through its monitoring feature. PercuSense is currently housed at the Alfred Mann Foundation in Valencia. It was one of the foundation’s earliest incubators under Dr. Robert Greenberg, current chairman of the foundation. “Our founder, Rajiv Shah, started his career working for Alfred Mann, and his philosophy continues to permeate our organization: ‘Tell me what you can do as opposed to what you can’t do,’” Kannard explained. “It holds a unique tie to our history.” The foundation location has features that fit the startup’s needs, including laboratory and office space, and a clean room for clinical and pre-clinical product. The company’s biggest goal is moving its technology into human testing, and beyond that product development. But, being temporarily unable to work in the office because of coronavirus restrictions, prototyping and testing will have to be put on hold – although PercuSense may be able to use its military contract to help catch virus symptoms early. “It has reminded us and reinforced the importance of what we are working on,” Kannard said in reference to the virus. “We believe that our lactate and oxygen sensing technology that we are working on through a military contract could be of great benefit in a coronavirus pandemic situation. It can provide remote monitoring, triaging and early warning for the progression, which can be especially critical for efficient use of health care assets. ‌Bioness Year‌ ‌Founded:‌ ‌2004 CEO:‌ ‌Todd Cushman Headquarters:‌ ‌Valencia Focus:‌ ‌Neuromodulation, rehabilitation Employees:‌ ‌‌190 Notable:‌ ‌Al Mann company success story. Bioness stands as a Santa Clarita biotech startup success story, showing companies in early stages the path to market. The company, which started with the support of late billionaire inventor Alfred Mann, has grown to help patients with neurological impairments through its electrical, robotic and software-based therapy systems. Patients with central nervous system disorders and orthopedic injuries use Bioness tech to help with gait or motor coordination. Its products include the L300 Foot Drop System, a wrap that hugs the leg just below the knee and helps regain leg function after a stroke or multiple sclerosis, and H200 Hand Rehabilitation System, which patients use for hand paralysis therapy. Bioness partnered with Ness Ltd. in 2004 to launch these devices in the U.S., eventually acquiring its Israel-based medical device partner in 2008 for $75 million. That enabled the relatively young company to “bring together its new products undergoing development with the Ness commercial products,” Bioness said on its website. In 2013, Mann recruited Todd Cushman as Bioness’ chief executive to work with providers on increasing patient access to the company’s products. Mann passed away in 2016. StimRouter, an implantable neuromodulation device designed to treat chronic nerve pain, was launched in 2016, and Vector Gait and Safety System was released in 2013 for body weight support while a patient undergoes physical therapy. The Vector system’s vest and leg loops attach to a hanging metal bar suspended from the ceiling, allowing for more daring therapy exercises without the fall. Bioness’ Bits software is used in physical therapy as an interactive way to enhance eye-hand coordination, improve peripheral vision, build endurance and memory recall, and increase visual search and scanning abilities. Patients use a touch screen of varying size at bedside or standing; programs help with cognitive challenges after stroke or athletic injury. Bits software was released in 2014. SetPoint Medical Year‌ ‌Founded:‌ ‌2007 CEO:‌ ‌Murthy Simhambhatla Headquarters:‌ ‌Valencia Focus:‌ ‌Medical device for patients with autoimmune diseases Employees:‌ ‌‌11-50 Notable:‌ ‌Ready to begin study for FDA approval. SetPoint Medical, a bioelectronic medicine company, focuses on treating patients with autoimmune diseases through its microregulator device. The implanted device is less than one inch long and delivers electrical impulses to activate the inflammatory reflex, “producing a systemic anti-inflammatory effect to help restore balance and regulate the immune system,” according to Murtha Simhambhatla, chief executive of SetPoint. “We are at the forefront of the development of a new type of therapy (bioelectronic medicine) that uses electricity to modulate pathological molecular pathways through innate physiologic control mechanisms, instead of systemic chemical or drug approaches.” In other words, patients with chronic autoimmune ailments such as rheumatoid arthritis or Crohn’s disease can get anti-inflammatory treatment without having to take a pill and deal with side effects like immunosuppression. “Current immune-suppressive therapies used to manage (rheumatoid arthritis) costs the U.S. health care system almost $30 billion annually, but yet a large proportion of the patients’ disease is not adequately controlled,” added Simhambhatla. “Current autoimmune disease treatments can be effective in slowing disease progression but may be accompanied by significant side effects resulting from immunosuppression, poor patient compliance and high cost to both payers and patients.” SetPoint plans to initiate its pivotal U.S. study this year for rheumatoid arthritis patients and follow the process to FDA approval, Simhambhatla said. At least that was the plan before COVID-19. “This is a dynamic situation as elective medical procedures will generally be de-prioritized to create capacity and to preserve surgical supplies for patients diagnosed with COVID-19,” explained Simhambhatla when questioned about how the virus would impact company plans. “We’re following the situation. How long this phase lasts will be dependent on how quickly the U.S. can contain the spread of infections through social distancing and contact tracing across the nation.” SetPoint last year announced positive results for its pilot study, also for rheumatoid arthritis, which evaluated the safety and tolerability of its device in 14 patients for 12 weeks. The company also completed a proof-of-concept study to test its device in patients with Crohn’s disease and is conducting pre-clinical research for device usefulness in multiple sclerosis patients. “It is our goal to provide patents, physicians and payers with a different option for the treatment of autoimmune diseases that has the potential to reduce disease activity without immunocompromising patients, in a much more cost-effective manner than approved drugs in this space,” added Simhambhatla. Conejo Valley A2 Biotherapeutics Year Founded: 2018 CEO: Scott Foraker Headquarters: Agoura Hills Focus: Cell therapy for cancer treatment Employees: 40 Notable: Raised $57 million in Series A funding Agoura Hills-based A2 Biotherapeutics came out of stealth mode in the fall, chock-full of former Amgen Inc. and Kite Pharma executives to lead the newly minted cell therapy company. The startup raised $57 million in Series A funding through venture capital firms Column Group, Vida Ventures, Samsara BioCapital and Nextech Invest. A2 plans to use the funds to develop programs focused on solid tumors using technology that allows antibody fragments to bind to cancer cells and destroy them. The company is also building its manufacturing facility next door to its existing offices in Agoura Hills. “I’m really pleased that we built our own lab space. It enabled us to maintain the speed of our programs, which is important, because the faster we can go the faster we can get to patients. Patients are waiting,” said David Lucas, vice president of operations for A2, in a November interview with the Business Journal. “It’s a speed game. If we can’t produce data, we can’t move forward. We wanted to have the control in our hands to drive everything forward.” A pipeline drug for head and neck cancer, and another drug called peptide HCP to tackle host-rejected tumors and virally infected cells, have reached lead optimization, the company said on its website. It’s a step in the FDA approval process where scientists have identified the most promising compounds in a drug to improve effectiveness, lessen toxicity or increase absorption, according to Genetic Engineering and Biotechnology News. A2’s peptide HCP and drug targeting neck and head cancer may be ready for clinical candidacy this year. The company also has a drug in its pipeline to treat pancreatic, colorectal and lung cancer currently in early discovery stages. Dyve Biosciences Inc. Year Founded: 2014 CEO: Ryan Beal Headquarters: Thousand Oaks Focus: Transdermal drug delivery Employees: 11 Notable: Gout treatment in Phase 2 clinical trial Dyve Biosciences Inc. has been a fixture in the Conejo Valley for roughly six years, working on drugs that can be delivered through the skin. Its two pipeline drugs are DYV 700 for gout treatment, and DYV 600 designed to treat melasma. They are in late stage and early stage clinical trials, respectively. The team is currently conducting Phase 2 clinical trials for its gout treatment across 20 centers and has 300 subjects enrolled in the U.S. “Our science allows us to deliver drugs through the skin, topically, with the speed of needles and the efficiency of pills,” Dr. Ryan Beal, chief executive of Dyve, said in an email to the Business Journal. “Dyve’s drugs bypass the gastrointestinal tract and avoid the associated side effects of pills and avoid the painful and impractical use of needles. Ultimately, this yields a drug that is not only safer and more effective, but also a drug that is intuitive and patient-friendly.” Dyve uses existing drugs to prove its delivery method. The company was able to bring DYV 700 from concept to Phase 2 trials in less than 18 months, and when the timeline drops, Beal said, so does cost and risk. There are fewer than 30 FDA-approved drugs available today that are delivered through the skin, Beal said, noting that transdermal drug delivery is “ripe for innovation.” Beal chose to set up shop in Thousand Oaks in 2014, calling it an “incredible ecosystem of opportunity” and citing an indispensable talent pool through the biotech community along the 101 Corridor, as well as local schools and universities. “Our entire team lives locally, is building community here, and we are all excited about building a strong and healthy company here for the long-run,” added Beal. Dyve’s chief executive expects the coronavirus pandemic to likely delay projects the company has in store, calling a focus on resource allocation “critical,” while expecting scientific minds in the biotech community to guide the world in a time of need. “For our industry, this is an incredible opportunity to be at the forefront of the solution. I’m proud to be part of an industry that ultimately will play a major role in solving this problem,” Beal added. Dantari Pharmaceuticals Year Founded: 2018 CEO: Richard Markus Headquarters: Westlake Village Focus: Technology to allow therapeutics across blood brain barrier Employees: 10 Notable: Currently in stealth mode. Dantari Pharmaceuticals, led by Dr. Richard Markus as its chief executive, is a small startup with roughly 10 employees, according to LinkedIn. Markus previously served as vice president of global management for Amgen Inc., where he led R&D activities for the biotech giant’s biosimilars unit. He joined Amgen in 2006 as its clinical development medical director and medical affairs lead for Xgeva, which treats prostate and breast cancer, as well as patients with myeloma. Timothy Hagerty was brought on as Dantari’s vice president of business and development. He’s also a former Amgen executive with experience as global head of development operations for early development. Hagerty oversaw 40-plus therapeutic assets for Amgen; previous positions include leadership at Roche Pharmaceuticals and Genentech. The team is working on technology that would allow small and large molecule therapeutics to cross the blood-brain barrier, which has been a challenge for doctors looking to treat central nervous system disorders. Its intellectual property is based on “cutting-edge science from one of the region’s foremost academic institutions,” according to Dantari’s website. The startup is looking to grow too, with seven science and research-related positions currently listed.