$58M Seed Launches Arialys

After two years of stealth, Arialys Therapeutics is launching with a sizable funding round and a lead candidate compound that could potentially add a new approach in treating neurological and psychiatric diseases.

The San Diego-based Arialys announced Sept. 12 the close of $58 million in seed financing from the company’s founding investors, Avalon BioVentures, Catalys Pacific, and MPM BioImpact, along with new investors Johnson & Johnson Innovation – JJDC, Inc. and Alexandria Venture Investments.

The funds will go toward advancing development of medicines that specifically block pathogenic autoantibodies in the central nervous system (CNS) that were initially researched at Tokyo-based Astellas Pharma before that company ended its CNS program. While in stealth, Arialys purchased Astellas’ lead compound ART5803 – a potential treatment for anti-NMDA receptor encephalitis (ANRE) and autoimmune psychosis – for an undisclosed amount.

Positive Data in Animal Studies

The novel approach of treating neuropsychiatric diseases driven by autoimmunity – and preclinical results of animal testing – is what prompted Arialys to purchase ART5803, said Jay Lichter, Ph.D., president and CEO of Arialys and managing partner of Avalon BioVentures.

“There hasn’t been a meaningful, new development in most CNS research in decades – certainly in schizophrenia and psychosis,” he said, adding that the asset was attractive because it was “completely novel, something completely different that nobody else was working on but has good scientific possibilities.”

Those good possibilities were apparent in data from animal studies on ART5803.

“What they showed is they could take this molecule and could effectively cure autoimmune encephalitis in a monkey, a marmoset,” Lichter said, adding that after the Astellas team successfully infected the marmosets, they were administered treatment of ART5803 “and two weeks later they were all better.”

While in stealth mode, Arialys repeated the experiment using a different monkey colony and the results were even better than the initial studies, with the monkeys recovering from encephalitis in just one week.

“To see a CNS acting drug that works this rapidly and completely is really quite unusual. The speed in which it works in the animal models is shocking,” Lichter said, adding that the biological mechanism that drug compound uses “is really very simple.”

Clinical Path Plan

ART5803 is first being developed to treat ANRE – a rare disease affecting 2,000 to 3,000 patients a year that most frequently occurs in young women. Lichter described ANRE as a “really severe disease” that starts with a patient getting a cold or flu followed by “a psychotic break” and other neurological symptoms, and within around two months, they go from “everything normal to being absolutely comatose in an ICU.”

Because ANRE is rare and there is a significant unmet need in treating it, ART5803 has already been given orphan drug status by the FDA. Lichter said Arialys expects to file an IND in the third quarter of next year followed by healthy volunteer studies in the fourth quarter and is looking to be in patients sometime in 2025.

In addition to being a promising treatment for ANRE, Lichter said there is emerging evidence that the autoantibodies against the same receptor play a causative role in a variety of more common disorders.

“We think around 5% of patients with schizophrenia have that as a result of making autoantibodies against the NMDA receptor,” he said, adding that there is also published data showing that same fraction might be responsible for other disorders such bi-polar, depression, epilepsy and even Alzheimer’s.

Arialys Chief Science Officer Mitsuyuki “Mickey” Matsumoto, Ph.D., the scientific founder the company who previously served as an executive director and head of the Neuroscience Research Unit and Virtual Venture Unit Psychiatry at Astellas Pharma, said his team has already generated “validating preclinical proof-of-concept data” for the promise of targeting autoantibodies.

“Precision medicine approaches have led to tremendous successes in oncology, and now we have the insights to be at the forefront of developing precision medicines to transform the treatment landscape for neuropsychiatry,” he said.

Arialys Therapeutics

Founded: 2022
CEO: Jay Lichter, Ph.D.
Headquarters: La Jolla
Business: precision medicines for neuropsychiatric disorders driven by autoimmune disease
Funding: $58 million (Seed)
Employees: 15
Website: www.arialysrx.com
Notable: In animal studies, Arialys’ lead compound treated monkeys infected with anti-NMDA receptor encephalitis in one week.