In this market, three things make fundraising easier for a biotech: a derisked asset touting a well-defined profile and an experienced team to guide the program’s development.
Crystalys Therapeutics has checked all three boxes, proving that it has what investors want with a $205 million series A financing round.
“It’s been a relatively fast process,” Crystalys co-founder and CEO James Mackay, Ph.D., told Fierce Biotech, explaining that the San Diego-based biotech started seeking funds after the annual J.P. Morgan Healthcare Conference in January of this year. The company initially closed on the round in June, marking about five months of fundraising.
“We have a rather unique situation here,” AstraZeneca alum Mackay said. “We have a highly derisked molecule that's got this proven safety and efficacy profile, and we've combined that together with the only drug development team that's had success in getting approval for a URAT1 inhibitor with both the U.S. and Europe.”
The veteran biotech leader previously helmed development through approval for Zurampic (lesinurad), the first URAT1 inhibitor to hit U.S. markets. The gout drug was voluntarily withdrawn from the market for business reasons but also carried a black box warning for acute renal failure.
“We always felt like it was unfinished business,” CEO Mackay said, underscoring his desire to develop a safer and more effective treatment for gout, a painful and inflammatory form of arthritis.
Getting the band back together
Now, Mackay has gotten “the band back together again” in efforts to do just that with dotinurad, a URAT1 inhibitor that has already nabbed approval in some Asian markets.
Alongside Mackay, Crystalys was co-founded by Chief Medical Officer Nihar Bhakta, M.D., who worked at AstraZeneca immunology spinoff and Mackay-founded Aristea Therapeutics, which closed in 2023 after safety signals for an inflammatory drug proved too large to mount.
Meanwhile, fellow co-founder DeAnne Reid has joined as Crystalys’ executive director of operations and business development after previously spending time at Aristea and AstraZeneca-acquired Zurampic-developer Ardea Biosciences.
In the chief operating spot is Ashwin Ram, M.D., who has managed multiple new companies and serves as a partner at Catalys Pacific, a Japan VC that also helped create Crystalys. The VC’s founder and managing director BT Slingsby, M.D., Ph.D., also came aboard to help form the biotech.
Global life science investor Novo Holdings rounds out Crystalys’ co-founders, with the crew launching the biotech in 2022.
Both Novo Holdings and Catalys joined SR One to co-lead Crystalys’ series A financing, which included Lightstone VC, Longwood Fund and Alexandria Venture Investments, among others.
Now that the biotech has emerged from stealth, it plans on using the $205 million haul to fuel two global phase 3 trials for dotinurad. One trial will focus on gout flare—a main symptom of gout—and one on the resolution of tophi, which are deposits of uric acid that form on joints.
Both of Crystalys’ trials are already screening patients, though dosing has not yet begun, according to Mackay.
How Crystalys plans to fill the gout treatment gap
Dotinurad is a once-daily pill targeting one of the two ways that uric acid is elevated—known as hyperuricemia—which leads to gout. The treatment aims to help people who can’t excrete enough uric acid from their body, versus individuals who are producing a larger amount of uric acid.
Th current standard of care for gout takes aim at the latter, working by lowering uric acid levels. The treatment is a xanthine oxidase inhibitor called allopurinol that is approved under several brand names.
“The standard of care addresses the production side of that equation,” Mackay explained. “It does not address the main reason that people develop gout, which is the lack of excretion.”
The drug has been on the market for more than 60 years, Mackay added, emphasizing the need for new treatments.
For U.S. and European markets, there aren’t any second-line options currently available for patients who don’t respond to first-line treatments. Crystalys wants to change that, focusing on certain regions of the world that dotinurad hasn’t secured approval in yet.
The treatment first landed a regulatory green light in 2020 in Japan, followed by approvals in China, the Philippines and Thailand.
The drug was invented by Japan’s Fuji Yakuhin, with Eisai picking up licensing rights for the three other Asian countries and selling the treatment under brand name Urece.
As for Crystalys, the biotech secured rights to the drug from Urica’s Fortress Biotech. In exchange for the drug rights, Crystalys gave Urica common stock shares equaling 35% of the biotech’s outstanding equity.
While Urica’s position has been diluted somewhat with the new financing, it still has “significant equity,” in Crystalys, Mackay said. Fortress Chief Financial Officer David Jin also holds a spot on Crystalys’ board, the CEO added.
Now, Crystalys and its team of 10 people—and growing—is pushing ahead in hopes of filling the treatment gap for patients with gout. And Mackay already has a picture in his head of what the drug could look like in the new regions.
“We're positioning this as a specialty care treatment with a rheumatologist as the prescribing physician,” Mackay said.