A small biopharmaceutical company in Raleigh is moving its lead drug candidate into clinical trials after closing a $36 million funding round.
The financing provides Aer Therapeutics with a multi-year runway that will cover at least two clinical studies, including a phase 1 trial set to begin this year, as it evaluates an inhaled treatment for patients of chronic obstructive pulmonary disease.
Aer began its fundraising efforts in the first half of 2022, before funding for life sciences companies really began to dry up. By the end of the year, the company closed out a Series A round that included investors Canaan, OrbiMed and the Hatteras Venture Partners in Durham.
"The (funding) environment continued to get tighter through the second half of last year, but became even more tight after (the collapse of Silicon Valley Bank)," said Aer CEO Jim Shaffer. "We were fortunate to close the round when we did."
Shaffer, who moved to Raleigh in 1995 for a position with what is now GSK (NYSE: GSK), became CEO of Aer in August of 2021. The company is built around its lead drug candidate, AER-01, which Aer licensed from the University of California, San Francisco after the technology was developed in the lab of Professor Dr. John Fahy, the company's founder. Irina Gitlin, Aer's vice president of research and development, also worked on the technology at the university.
The early research was supported by about $18 million in funding from the National Institutes of Health, which facilitated the development of the drug to where it was about six months away from moving into a phase 1 study. The progress made the company an attractive pitch to investors, Shaffer said.
Aer has built a team of eight total employees, including five in Raleigh, two in Seattle and one in San Francisco. The company also has a board of directors that includes Fahy, Shaffer and representatives from each of Aer's three recent investors, including Christy Shaffer, a general partner at Hatteras.
As it moves into clinical studies, Aer could look to add another two to five employees in a year. The company plans to lean on contract research and manufacturing organizations to move this lead drug candidate forward, Shaffer said.
The funding round should give the company a runway of about two and a half years, Shaffer said. This will support the upcoming phase 1 study and a phase 2/a proof of concept study that could begin in the middle of 2024. Following this study, Aer would seek out funding for a Series B round to support another phase 2 study that would help the company identify a dosage before moving into a phase 3 study.
Through its lead drug candidate, Aer is focused on an area of COPD that's not often addressed, Shaffer said. While most drugs in this space target bronchial construction and inflammation, Aer is focused on the formation of mucus plugs that can obstruct a patient's airways.
Long-term, Aer is being built to take its lead drug candidate through the necessary clinical studies and into commercialization. However, Shaffer said the company could evaluate multiple options as it moves closer to a phase 3 study.
"We are building Aer Therapeutics with the mindset that we will have the ability and funding to take it through (clinical) trials and into commercialization," Shaffer said. "I think we’ll (also) have a really great opportunity to partner this asset if we choose too."
