BioWorld International, 02/02/2000
Keryx Raises $8.8M Privately to Fund KinAce Technology
By Rachelle H.B. Fishman
BioWorld International Correspondent

JERUSALEM - Keryx Biopharmaceuticals Inc., an Israeli bioinformatics and drug development company incorporated in Delaware, successfully completed an $8.8 million private placement, money that will be used to bring its kinase-targeted compounds and late-stage product through clinical trials.

Protein kinases are enzyme modulators of signal transduction. Many diseases ensue when kinases transfer inappropriate messages. The Keryx KinAce technology uses its unique bioinformatic algorithms to focus on a proprietary regulatory loop structure that both flags and distinguishes one disease-specific kinase from another. Drugs are then designed for this region, which can selectively inhibit or stimulate the precise kinase associated with a particular disease. The KinAce technology focuses on the signpost-specific bracketed hypervariable regions.
Keryx, with a research and development center in Jerusalem, uses these "molecular cues" to screen 20 or 30 candidate molecules to find drug leads of interest, while other, less specific technologies must screen through tens of thousands of possibilities.

"This really harnesses the power of bioinformatics for rapid drug discovery," Keryx CEO Morris Laster told BioWorld International.

The interactive algorithm was developed by Shmuel (Muli) Ben-Sasson, a professor of cell biology at the Hebrew University in Jerusalem, while he was on a sabbatical with Judah Folkman, chairman of the Department of Surgical Research at Children's Hospital in Boston. The patent for KinAce, a core drug discovery platform, was filed by Children's Hospital in 1997 and is jointly owned by the Children's Medical Center Corporation (CMCC) and Yissum of Hebrew University in Jerusalem, Israel.

The technology is under an exclusive worldwide license to Keryx, in which CMCC and Ben-Sasson are shareholders.
Additionally, Keryx expects to file an investigational new drug (IND) application with the FDA in the second quarter to begin a pivotal Phase IIb/III clinical trial of KRX-101 (Sulodexide) for the treatment of diabetic nephropathy. Keryx licensed rights from an Italian company to develop and market KRX-101 in North America and the Far East.

The company also plans to file an IND this year for a Phase I/II clinical trial of KRX-123, an early-stage compound derived from the KinAce technology for the treatment of hormone-refractory prostate cancer.

"We will use the proceeds of this offering to move our lead compound, KRX-123, and the various other kinase-directed compounds derived from KinAce, rapidly through clinical trials," Laster said. "The fact that we have 11 lead candidates in under two years indicates the power of our algorithm.

"Our strategy of combining the in-licensing of late- stage compounds and the development of this powerful core technology promises to significantly increase the future value of the company," he said.

The company intends to open new laboratories in Jerusalem.

Lead investors in the placement were institutions and a select group of private investors. Among them were Paramount Capital Inc., of New York, which holds a 30 percent stake in the company, and Leumi & Co. Underwriters, of Tel Aviv.

Ron Bentsur, a director at Leumi & Co., said, "Given the combination of Keryx's late-stage diabetic complication drug together with a unique and powerful platform bioinformatics technology, Keryx should make for an extremely attractive IPO."

Laster said Keryx intends to go public on Nasdaq later this year. The company will start talking to underwriters in the U.S. and Europe in coming weeks concerning the planned IPO.

Laster said the company hopes to receive its first FDA approval in 2002, start selling the product in 2003, and see profits in 2004.

BioWorld International, 02/02/2000