Lonnie Moulder’s new biotech play grabs $118M, steering into PhIII and more deals

Serial biotech entrepreneur Lonnie Moulder has scored some big wins along the way, most notably the $9 billion he racked up selling MGI and Tesaro. And now the lead project he’s helping manage as executive chair is making a bold move into Phase III — damn the market turmoil that has largely iced IPOs.

The biotech, a transpacific outfit based in Waltham, MA, with execs scattered in the US and China, is called Zenas BioPharma, and the Phase III trial they’ve set up is for obexelimab, a drug they got from Xencor last fall with a mix of equity and milestones.

Now Moulder and crew have put together a $118 million round in less-than-ideal circumstances to fund the trial, which should run into 2024 on the way to a hoped-for approval. And the company is looking to add to the pipeline — looking at a global development strategy with some special regional interests in China — through some new business development deals.

Zenas originally did a deal with Xencor for some preclinical assets in 2020, and last fall, they went back for a drug that hits the well-known target CD19 and FcƳRIIB, an antibody-antigen combo aimed at inhibiting B cells without demolishing them. That approach has delivered positive, though still largely unseen, Phase II data for Xencor, which also reported a failure on the primary endpoint for lupus.

Back in 2018, Xencor had been setting the stage for a Phase III study in IgG4-related disease, a rare inflammatory disease that affects some 20,000 patients in the US each year. Glucocorticoids fill the frontline response, which turns toxic for many, says Zenas.

“Mechanistically, it’s very compelling,” Moulder, who also noted some trial design issues for Xencor’s failed Phase II, tells me. They got to the poster stage on the IgG4-RD data, but the primary investigator from Mass General has yet to publish it.

As for Xencor, they shifted into Moulder’s one-time preserve, oncology, and obexelimab was sidelined — until now.

Jim Momtazee

Enavate Sciences — which was set up by KKR vet Jim Momtazee’s Patient Square Capital with $300 million back in May — led the round, with a group of new investors assembled that includes Longitude Capital, Vivo Capital, Rock Springs Capital, Perceptive Advisors, Agent Capital, Pivotal bioVenture Partners and Superstring Capital. Then the existing backers came back in: Fairmount, Wellington Management, Tellus BioVentures, Quan Venture Fund, and Xencor.

Enavate’s Jim Boylan, an ex-SVB player, will not join the board.

Moulder set up a family office after the Tesaro sale, which netted him a nice fortune to reinvest in his chosen industry. And he’s quite aware just how serious the Nasdaq meltdown has been in biotech. For his portfolio, that means more money needed over a longer time period than he once imagined. And there’s no sure way to say when the current cold season will last.

Maybe it will start easing next spring? Maybe later in the year?

For now, though, he’s one key funding step forward with enough money to produce pivotal data from a 200-person study. And that’s a good day.

fund
nasdaq
sell
biotech