After winning a total of $60,000 in the NC BIONEER Venture Challenge, Plakous Therapeutics received a $250,000 loan from the N.C. Biotechnology Center as it looks to close a $4 million investment round and raise an additional $10 million in equity.
The Winston-Salem regenerative medicine took home first place in the statewide NC BIONEER Venture Challenge, an initiative of NC Biotech, winning $40,000 in late June. Plakous had been awarded $20,000 in late May as the regional winner from the Piedmont Triad.
Plakous also received an additional $250,000 from NC Biotech under the center’s Small Business Research Loan program.
Now, CEO Robert Boyce said Plakous is raising $10 million in an equity round that will help the company to enter human studies within the next two years.
Using the placenta to treat rare pediatric disease
As a regenerative medicine company, Plakous has developed patented biotherapeutics to prevent necrotizing enterocolitis (NEC), a rare pediatric disease with a 30% mortality rate that causes an estimated $8 billion in overall health care costs annually. The inflammatory gastrointestinal disease mainly affects premature infants, as they often lack exposure to amniotic fluid, according to Boyce.
The biotherapeutics developed by Plakous, called Protego-PD, are an orally delivered mix of anti-inflammatory and developmental proteins – made from the post-delivery human placenta – that mimic amniotic fluid.
Founded in 2016 by Dr. Scott Washburn, Plakous is a homegrown regenerative medicine company, meaning it was not spun out of academic research. Washburn, who currently serves as Plakous’ chief medical officer, is a provider with Lyndhurst Gynecologic Associates in Winston-Salem.
Plakous employs six people currently, a number that Boyce hopes to double within a year and a half.
Protego-PD™ has received the orphan drug and rare pediatric disease designations from the U.S. Food and Drug Administration. It also signed a multi-year, know-how license agreement with Mayo Clinic in 2020.
Plakous is about a year and a half away from human trials, Boyce said, but has “compelling data” indicating that Protego-PD lessens the impact of NEC.
Funding from NC Biotech to help manufacturing and toxicology studies
Boyce said the monies from NC Biotech will be used for manufacturing, development and testing.
“Within the FDA’s world, there’s what they call chemistry manufacturing and controls, or CMC. Those are the regulatory components that surround the development, manufacturing and safe release of the product to ensure that its consistency and its potency, so every time you make it, it’s the same product and it’s going to have the same efficacy,” Boyce explained.
A series of tests will be conducted in third-party laboratories, Boyce said.
Once Plakous finishes with that testing – to ensure that the product is manufactured consistently and safely – it will move into toxicology studies, which will determine that the product is fundamentally safe.
Boyce said the manufacturing studies will take Plakous through the end of this year and the toxicology studies will take most of 2023. Then, Plakous will submit its investigational new drug application to the FDA at the end of 2023 or the beginning of 2024. Human trials will be about a two-year process, he added.
From NC Biotech, the Small Business Research Loan program invests up to $250,000 in early-stage life science companies. According to the program’s website, the loan – for which Plakous received the maximum amount – is a senior, unsecured loan with a five-year, fixed-term with balloon payment at maturity for principal and accrued interest.
Following a rigorous application process, successful applicants receive 50% of the loan amount at closing, 40% upon receipt and approval of a mid-term project report and the final 10% upon receipt and approval of a final project report. The interest rate is equal to the current prime rate plus 2% and includes a warrant to purchase company stock.
Plakous seeking $10 million in equity to begin human studies
Plakous has raised $4.5 million to date, Boyce said, with about $1.8 million of that from a grant from the National Institute of Health.
Boyce said Plakous is looking to raise $10 million in an equity round to help complete the rest of the studies and get into its first human study. When Plakous enters its first human trial, the company will look to raise additional money to complete clinical trials, Boyce said.
Plakous is looking for funding through venture capital funds and investors.
Plakous also has a $4 million convertible note open for investment, allowing them to raise up to $4 million. Boyce said that on that convertible note, Plakous has already raised approximately $2.1 million.
In its first convertible note in 2017, Plakous raised its maximum of $600,000, Boyce said.
Plakous is looking at additional grant funding to expand the work into other indications. Boyce expects Plakous to pursue an indication for osteoarthritis and osteoporosis.
“Fundamentally, the medicine we’re creating, Protego-PD™, is a mix of proteins. Its primary function that we have found in our cell-based studies is that it worked very, very effectively as an anti-inflammatory medicine,” Boyce explained. “NEC is essentially a runaway inflammation of the baby’s gut and osteoarthritis is an inflammation of the joints that causes deterioration. The fact that our product is fundamentally anti-inflammatory is where we see it providing benefit.”
