Arsenal Biosciences is moving on up. The cell therapy company has added on $325 million in ammunition with big-name backers like Regeneron joining the artillery as the biotech sets out to build the biggest—and best—house on the block.
“It is an incredible challenge. It was challenging for us too,” ArsenalBio CEO and co-founder Ken Drazan, M.D., told Fierce Biotech about raising money amid the rocky investor environment. “No one in this day and age would be arrogant to say that it was easy, and you certainly wouldn't hear that from me ever.”
The oversubscribed series C fundraise includes new investors Regeneron Ventures, Arch Venture Partners and NVIDIA’s NVentures, among others, according to a Sept. 4 release. The financing round is one of the largest private biotech financings of the year, coming up behind Xaira Therapeutics' $1 billion, Mirador Therapeutics’ $400 million and Formation Bio’s $372 million.
“What investors are looking for is unambiguous signals that they're investing at the right time and that they can make money with the company's success at any valuation,” Drazan explained. “The investors were enthusiastic about what the business plan was for the next 18 months, and so we're really using their capital to forward and progress the programs that are in the clinic.”
Packing up and moving on
Those programs take aim at kidney and prostate cancers, while ArsenalBio pushes aside former lead asset AB-1015, a CAR T-cell therapy being studied in a phase 1 ovarian cancer trial. The study has a primary readout date slated for December, according to ClinicalTrials.gov.
“Resources are still scarce. The amount of capital we raise is not infinite, and so we will have to make some very deliberate choices about whether we can fully resource our full pipeline or only part of our pipeline,” ArsenalBio’s CEO said. “And in this case, we intend to more heavily focus on our kidney cancer program and our prostate cancer program, and hopefully someday we'll be able to come back to the ovarian program when resources are greater.”
When asked further about plans for the ovarian cancer asset, Drazan said the company would have more to say on the matter later this year.
“One of the reasons we made that decision is that when we designed the initial drug— personalized medicine, if you will, for ovarian cancer—it was our first-generation technology,” the CEO explained. “As time moved on, we were able to add even more technology, and that became the basis of our kidney cancer program. And even further technological improvements have been added from our kidney program into our prostate cancer program.”
The younger assets’ additional features and advanced tech make ArsenalBio more likely to achieve the mission of widely clearing metastatic cancer, according to Drazan.
The pivot is a critical underpinning of ArsenalBio’s strategy, the CEO explained. The biotech’s game plan is to be so far ahead of the competition that its science won’t risk being commoditized, something that has happened for other cell therapy approaches.
The biotech is now turning to AB-2100, a kidney candidate that entered a phase 1/2 trial this spring. The asset is designed to treat patients with clear-cell renal cell carcinoma (ccRCC) and has nabbed fast-track designation from the FDA.
The therapy uses ArsenalBio’s CITE (CRISPR Integration of Transgenes by Electroporation) tech to engineer T cells to selectively target tumors in hopes of enabling the patient’s immune system to destroy ccRCC cells without damaging normal tissues.
Drazan said the biotech will share more information about the program before Thanksgiving, or late November, of this year.
Building on a cul-de-sac
ArsenalBio separates itself from the pack by focusing solely on solid tumors, as opposed to blood cancers, and by developing solutions to solve some of the problems that can plague the cell therapy landscape.
The company went after the “best location in the genome,” according to Drazan. Dubbed GS94, the newly identified safe-harbor locus is found on chromosome 11.
“It’s like having the best housing site on a cul-de-sac,” Drazan said. But having the best location isn’t enough. No, ArsenalBio is going beyond that—the company also wants to build the biggest house.
For Drazan, that means creating “the most comprehensive biological approach” to treat solid tumors, which are evasive, hostile and can mutate. ArsenalBio is addressing each obstacle by providing multiple features in one product. To do so, the biotech uses the CRISPR CAS9 nuclease and makes a single cut in the genome to insert a large piece of programming DNA, so large that it exceeds what any virus could deliver, according to Drazan.
Besides size and location, Drazan said ArsenalBio wanted to "architect the most innovative design" of its dream home. This is where the biotech’s toolkit comes in.
The set of tools ArsenalBio touts allows the company to be “very creative” in the design of its products, so there can be up to seven different functional events happening, the CEO said. The toolkit is designed to tackle technical problems tied to T-cell medicines such as T-cell exhaustion, tumor specificity and genome toxicity, with a portion of the new financing slated for tool advancements.
“We developed a certain set of technologies that really distinguish our approach,” Drazan explained. “Most other companies have more of a static toolkit … the ability to innovate on an ongoing basis can be pretty challenging if you don't have all that [in a] toolkit early on.”
Back in September 2022, the programmable cell therapy company raised $220 million in series B funds with support from Bristol Myers Squibb, the Parker Institute for Cancer Immunotherapy, SoftBank Vision Fund 2, Westlake Village BioPartners, Kleiner Perkins, Byers Capital and Hitachi Ventures—investors that all rallied again for ArsenalBio’s series C.
When asked whether the biotech was revving up for an IPO, Drazan pointed to the biotech’s large investor syndicate.
“The investors who gave us the new capital—which included our own internal investors who played a sufficient role in this financing—really want to see us play out these milestones of clinical proof-of-concept in both kidney and prostate [and] advance our technology platform,” he explained.
“Please take notice that the investors that are in our series C are traditional life science investors, crossover investors, strategic pharmaceutical investors and uniquely technology investors,” the CEO continued. “I can tell you that the technology investors are not there necessarily to fund the drug development. So, there must be some other special sauce there.”
An IPO special sauce, perhaps? Time will tell. For now, the biotech is zeroing in on those proof-of-concept data as well as separate partnerships with BMS and Roche’s Genentech.
That’s right: ArsenalBio-backer BMS also paid out $70 million cash at the beginning of 2022 for a multiyear discovery collaboration with the biotech. Later that same year, Genentech also ponied up $70 million to use ArsenalBio’s armory of screening and T-cell engineering tools.
Those partnerships continue to progress, Drazan said, adding that ArsenalBio will have more to share later this year regarding its collaboration strategy for its tech platform.
Arsenal employs a team of 265 people and is growing, Drazan said, noting that the company’s diverse team plays an important role in developing products in today’s market.
“This is sort of a daunting area of medicine today,” the ArsenalBio CEO said. “There are numerous strategies for treating patients with solid tumors, but rarely are they cured. So, the opportunity that CAR-T brings, as it is evidenced in patients with blood cancers, is the possibility of actually clearing the entire tumor. That's the mission, and we're well along our way towards doing that.”