Avalon’s latest biotech closes $58M round as it pursues treatments for autoimmune brain conditions

Arialys Therapeutics announced Tuesday that it tied the bow on a $58 million seed round to develop treatments specifically for brain disorders caused by immune reactions.

Endpoints News reported in December that the CNS biotech was working on a $55 million round, which was backed by Avalon BioVentures, MPM Capital and Catalys Pacific. Johnson & Johnson’s venture capital arm and Alexandria Venture Investments also took part in the big seed round.

Avalon’s Jay Lichter serves as president and CEO of the biotech, which has been in stealth for the past two years and is running with a lean crew of seven to eight employees in addition to consultants. The company is tackling immunoneuropsychiatry, an emerging field examining how inflammation and autoimmune reactions impact the brain.

“How can we leverage the tools of I/O, and understanding of immunology through the last 15 years, and apply them to a whole new disease area — the CNS?” Lichter said.

Mitsuyuki “Mickey” Matsumoto

The biotech’s lead candidate is ART5803, an antibody that blocks autoantibodies from binding to the NMDA receptor. The La Jolla, CA-based biotech bought the antibody from Astellas, where its scientific founder Mitsuyuki “Mickey” Matsumoto was previously head of the neuroscience research unit.

Arialys is testing the treatment for two autoimmune brain conditions: anti-NMDA receptor encephalitis (ANRE), which is a form of brain inflammation, and autoimmune psychosis.

Lichter noted the development path for ANRE is more straightforward than for psychosis. Only around 5% or so of psychosis patients are likely going to be positive for autoimmune antibodies, Lichter said.

“There’s not a universal acceptance of diagnostic criteria and diagnostic pattern,” he continued. “The Europeans are leading this — particularly Germany and England. The US is much more fragmented — there are believers and there are disbelievers in the US.”

Historically, the central nervous system — the brain and spinal cord — has been considered immune privileged, meaning that it was mostly spared from inflammatory and autoimmune responses. However, more research suggests that the immune system is implicated in a greater number of neurological and psychiatric disorders than previously thought.

In marmoset studies, Lichter said the antibody was particularly fast-acting, with behavioral responses seen after one week, and a more robust response after two weeks. The biotech is aiming to start human trials of the antibody in the third quarter of 2024, beginning with healthy volunteers.

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