IBD startup Landos lands $60M Series B in first test case of Chris Garabedian's lean and mean model at Xontogeny
When Chris Garabedian teamed up with Virginia Tech professor Josep Bassaganya-Riera to launch Landos, their team of 13 was ready to test their lead drug for inflammatory bowel disease in the clinic. But they also set out to prove another, almost existential, hypothesis: If you find the right partners, you can build a proper early-stage biotech with just $10 million instead of following the more splashy model that’s become standard in the industry.
So 18 months later, as Landos closes a $60 million Series B and lines up two Phase II studies, it’s also serving as an interim readout of sorts for the meta experiment at Garabedian’s startup accelerator, Xontogeny. In the process, the ex-Sarepta CEO is also unveiling a venture fund that Xontogeny has set up with Perceptive Advisors as he plots several more similar plays.
True to its lean and mean motto, Landos has grown only slightly to 15 staffers while hustling through large animal toxicity studies and a Phase I in Australia, which confirmed both safety and activity in a key biomarker.
“We’ve come a long way,” Bassaganya-Riera told me.
In addition to targeting a pathway he’s studied for more than a decade known as Lanthionine Synthetase C-Like 2 (LANCL2), Landos has come up with a small molecule drug that overcomes several drawbacks of current therapies for Crohn’s disease and ulcerative colitis. It’s orally available and limited to the gut with little systemic exposure.
In the upcoming Phase II studies — first ulcerative colitis, then Crohn’s — Landos plans to evaluate two doses of BT-11 alongside placebo, eyeing clinical remission as the main endpoint.
They’ve set it up this way to present the strongest case possible for the industry, Garadebian said. With crossover investors like RTW, Osage University Partners and PBM Capital on board, he’s already thinking about an exit, whether in the form of an IPO or a buyout.
“We looked at when Celgene acquired Nogra Pharma for $700 million, it was based on an open label single arm study that had some interesting data in Crohn’s that ultimately failed,” he said. “We actually like the idea of following the Receptos model, which did a well designed powered Phase II studies that ultimately sold to Celgene for $7 billion instead of $700 million.”
Bassaganya-Riera, the CEO, added that in preparation for the exit he will likely beef up the medical team and hire a CFO in the management office at Ashburn, Virginia (his lab, as well as the corporate headquarters, remains in Blackburg in the southern part of the state). But the hope is to stay agile, continuing to rely on a close relationship with Garabedian and his team at Xontogeny, which has helped with everything from advising on how to deal with the FDA to reviewing term sheets that has saved the company many mistakes along the way.
That kind of week-to-week interaction and oversight was exactly what Garabedian was looking for in a Xontogeny company. With a goal to and a goal to raise as much as $200 million for the Perceptive Xontogeny Venture Fund, he’s eyeing a number of other projects spanning oncology, hematology, CNS, cardiovascular, and more, in which they can write the entire Series A check and help bring a company to the clinic within two years of getting involved by outsourcing much of the work.
Garabedian calls it the old fashioned way of doing venture capital. And he believes it still works.
“I would argue that many early-stage biotechs are over-capitalized, they are over-resourced,” he said. “It’s not uncommon for a Series A round to end up hiring a CEO and a chief scientific officer and a chief medical officer and a head of regulatory and a head of tech ops and a lot of these people are making half a million dollars a year, and I think that is more than what’s needed if you know what you’re doing. If you focus on the design of the experiments and you know how to identify the right supplies to help you do it.”
“Honestly, the message that we want to get out ultimately is to prove that you can do good drug development, and you can do it efficiently with a small, focused team. and I hope that people will look back and say why are we spending $50 million, $60 or $80 million in a Series A,” he added.
At Landos, the $10 million didn’t even just cover BT-11. While the lead asset has taken up the majority of their efforts, Bassaganya-Riera said they have an “expansible pipeline” featuring assets that target LANCL2 in different ways for other autoimmune diseases like type 1 diabetes and rheumatoid arthritis. Assets targeting a novel pathway dubbed NLRX1 are also in the works.
“We have the potential to advance other assets over next few months,” he said. “We are not a one-trick pony.”