San Diego Business Journal

Exalys Therapeutics, a new San Diego bitotech startup, has raised $15 million in Series A financing from Domain Associates and Catalys Pacific to commercialize three potential drug candidates.

Domain and Catalys co-led the $15 million financing round for Exalys. The firm has an investment portfolio comprising more than 80 companies with offices in San Diego and Princeton, NJ. Exalys, currently a four-person operation, the startup expects to grow to a team of 20 over the next 18 months.

Incorporated in 2019, Domain Associates licensed the drug candidates from Japan’s Eisai, a Japanese biopharma and set up the company in San Diego to move them through testing.

Following the funding, the biotech plans to move ahead three potential drug candidates that target EP4, a known cancer target that also plays a role in neuroinflammation.

First Indication

The first indication Exalys is pursuing  is postoperative delirium, a complication that can follow surgery. In particular, the incidence occurs as patients age increases, this form of delirium can prolong hospitalization, cause or accelerate cognitive decline, and result in a worsening quality of life.

“Our first target indication will be in postoperative delirium,” said Rick Orr, president and chief executive of Exalys Therapeutics. “It is the most common complication in older adults and there is tremendous personal consequences as well as societal impacts with the condition. With this initial financing, it has allowed us to secure the rights to the compounds from Eisai and then begin working on all of the preclinical activities.”

Postoperative delirium is also associated with the acceleration of cognitive decline in patients with dementia and Alzheimer’s disease. In addition to the negative impact on elderly patients, postoperative delirium represents an estimated $150 billion in annual increased costs to the U.S. healthcare system.

FDA Permission

Orr said, the company is evaluating which of the Eisai candidates to move ahead first, and plans to ask the FDA for permission to start human testing of the one it selects as its lead in the second half of 2021.

The potential treatment would be given daily by mouth for a day or two prior to surgery, then for up to week afterward. The aim is to reduce the activity of EP4 during and after the procedure.

In terms of revenue generation, Exalys is projecting between $750 million to $1 billion in annual sales, in the US alone. Worldwide those numbers would increase significantly, Orr said, “We think that postoperative delirium is certainly a significant unmet medical need with substantial commercial opportunities that come with that.”

However, first and foremost, its focus is to develop a safe and effective treatment that will have an impact on both patients and the broader healthcare system.

The Team

Before joining Exalys, Orr has worked with Domain partners Eckard Weber and Dennis Podlesak for nearly 20 years. Their first venture was at Domain-backed Peninsula Pharmaceuticals, where Podlesak was CEO and Orr general counsel. Peninsula licensed assets from Japan’s Shionogi and developed them until Johnson & Johnson came calling. J&J acquired the firm for $245 million in 2005.

Orr and Podlesak also served in similar roles at Cerexa Pharmaceuticals, which moved ahead a drug candidate licensed from Takeda Pharmaceutical until it was acquired by Forest Laboratories in 2006 for $480 million.

Following the Cerexa acquisition, Podlesak joined Domain, and Orr joined as chief operating officer. Orr also served as Chief Operating officer of Calixa, where he led the successful sale of the company to Cubist Pharmaceuticals, which later merged with Merck.

Most recently Orr was head of pain drug developer Adynxx, another Domain-backed company, which last year went public. Adynxx founder and chief scientific officer Julien Mamet and Bill Martin, who handled corporate development, marketing, and commercial strategy, also made the move to Exalys, Mamet as CSO and Martin as executive vice president, corporate development and operations.

Taking an untraditional approach in biotech startup world, Domain Associate’s playbook is to find assets in technology, form the company, and combine that with a proven management team. A formula that has been done historically quite well.

“We believe the Exalys platform of EP4 antagonists has the potential to transform the treatment of postoperative delirium and other neuroinflammatory disorders that currently have no meaningful treatment options,” said Dennis Podlesak, chairman of the Exalys board of directors, adding, that he is delighted to be working with Rick and the team again with the goal of building another highly successful biopharmaceutical company focused on advancing a portfolio of new therapeutics.