The Californian biotech who brought a $100m IPO to UK shores

Verseon was founded in 2002. Its proprietary drug discovery platform, developed entirely in-house, is the product of over ten years of research and development. The company’s platform is the first systematic, computationally-driven solution to achieve the molecular modelling accuracy necessary for rapid and cost-effective drug discovery.

Verseon plans to use its platform to establish a diversified discovery pipeline across multiple disease areas. Current drug programs include anticoagulation, diabetic macular edema, and oncology (solid tumours). Here we talk to Adityo Prakash, CEO of Verseon on their recent completion of their $100m AIM-listing.

B&M: Adityo, let’s start by understanding a bit more about Verseon as a company. 

AP: Verseon is a drug discovery and development company. Using our in-house computer-driven platform we design completely novel drug molecules that are unlikely to be found through traditional methods. Our platform allows us to explore a much larger chemical space and to design novel drug candidates with highly desirable properties.

After designing the molecules on the computer, we make and test them in the lab to figure out which of these would be the best to advance into the clinic.

We’re planning to build a risk adjusted, hedged portfolio of many disease programmes each with multiple candidates, thereby diffusing execution risk.

B&M: What does this technology platform actually achieve? How is it unique? 

AP: What we do is molecule engineering. Our platform uses a physics based approach to figure out which novel drug molecules designed using our process would be the best fit to a protein’s three-dimensional structure. The platform calculates which molecules would be high quality binders and considers other desirable properties such as selectivity, room for optimization and other drug like characteristics.

Computers are widely used in drug discovery, but, usually in a supporting role. We have taken an entirely different approach. Over 10 years we have built a platform which can drive the design of novel molecules for any protein target with available structure. Now we’re rolling out our first series of drug programmes, which demonstrates what the platform can do.

B&M: You have 3 drug programmes in early stage development. Can you expand on their focus areas?

AP: Our first programme is in anti-coagulation, and would treat various cardiovascular indications including prevention of strokes in atrial fibrillation, venous thromboembolism and acute coronary syndrome. Our drug molecules work through a completely novel mechanism of action. They have demonstrated proof of concept in terms of both efficacy and safety, where they really stand out because while they prevent clots from forming, they don’t increase bleeding risk, which is what happens with all the other drugs that are in the market.

Our second programme is for diabetic macular oedema. Our drugs go after a target called plasma kallikrein, and unlike current treatments, which are injections in the eye, can actually be delivered as eye drops. We have results showing that our candidates can pass through rabbit cornea, and this mode of administration would clearly provide a great advantage over current intra-vitreal injections.

Our third programme is for solid tumour cancers. These candidates are a new class of angiogenesis inhibitors, which show a very interesting profile and demonstrate low cytotoxicity compared to current drugs.

B&M: Where are these drug programmes in their stages of development?

AP: The most advanced is the anti-coagulation programme in late stage preclinical studies. The DME programme is on a fast track so it will probably catch up some time soon. The oncology programme is slightly further behind. And we plan to initiate additional drug programmes in the next two years.

B&M: Do you see your business developing a hybrid model of both a service side using this technology platform and a drug programme side?

AP: No, we have no plans to provide services with our platform. It’s purely for internal use. In this industry if one actually manages to successfully build a drug design platform that works, it makes no sense to sell it as a tool or service, at least in our opinion. The best way to actually capture the value of what we’ve built is to develop these drug programmes. We expect to out-license drug candidates from some of our drug programmes while we will take candidates from our other programmes into the clinic.

B&M: But you intend to out-license your drug candidates at early stages of clinical development to pharmaceutical companies?

AP: Yes, as the business matures, it is expected that these out-licensing deals will be struck at progressively later stages of clinical development and, therefore, more value will be captured from the asset, although each potential licensing deal will be analysed on a case-by-case basis.

B&M: If we move on to your successful IPO, congratulations on completing the listing on AIM for $100 million. It would be good to understand what attracted Verseon to listing in the UK. What was the rationale behind listing on AIM?

AP: We considered various options, but it really boiled down to a strategic decision on our part. We were actually very impressed by the long term long only view of many institutional investors we met in the UK. Their outlook seemed to fit very nicely with our vision for growth of the company and execution of our business model.

We also take a more global view of clinical trials for our drug programmes and in this regard Europe, with the UK as a base, fits nicely into our future development plans. At Verseon our growth plans involve a very long and steady development arc for the company, and we believe in consolidating our position and capabilities at each stage of growth. AIM provides a good spring board for our next stage of growth, with its twice a year reporting. And with the investor base, we felt it would provide a good support base for the company in the long run. We’re not ruling out a US listing in the future, but there is no desire to get on the quarterly reporting treadmill just yet.

B&M: What is it you think about your story that really hit home with investors, what they found compelling?

AP: We’re delighted that investors and analysts recognised the value of our platform and drug pipeline.

Industry after industry has been transformed by computational design and processing. However, the pharma industry has been a hold out in terms of how much computers have been able to influence the way things are done at the heart of drug discovery. That is changing, and that’s the value I believe people saw in what we are building. That transformation of the pharma industry we believe is about to happen with the kinds of things that we’ve built over the course of the last decade or so.

The commencement of trading follows the placing of 32,569,047 new common shares at a Placing Price of 202 pence per share, raising gross proceeds for the Company of £65.8 million (approximately $100 million). The Company has 149,739,909 shares in issue, giving Verseon a market capitalisation at the Placing Price of approximately £302.5 million.

Net proceeds of the Placing are intended to be used for advancing the our current drug programmes, expanding our drug development pipeline into additional disease indications and continuing to develop its drug discovery platform.

B&M: So you think the industry is long overdue for adopting this type of approach?

AP: Indeed, it is a very hard problem, and it has resisted a lot of prior attempts. At the end of the day computers are currently just being used as a crutch. What we’re talking about, is fundamentally driving the design of new drugs using computers in much the same way your car is designed on a computer, your aeroplane, like the Boeing Dreamliner, is designed on a computer, or how your architects design new buildings on a computer.

That level of predictive design has simply not been possible in the pharma industry before. We’re not talking about eliminating the laboratory, we’re not talking about eliminating clinical trials. We’re talking about doing the first bit of fundamental design against a disease causing protein correctly, and being able to explore much greater numbers of options than you can in the lab, in order to come up with high quality drug candidates.

We believe this gives us the ability to actually transform how you think about the whole drug discovery and development process and investors and analysts recognised the value in what we’re building.

B&M: What are the obvious benefits to your platform approach? 

AP: There are time and cost advantages. Computers scale much better than people and if drug design is driven by computers, then lab scientists can be much more usefully and happily engaged in more productive work in working out which candidates should be the best ones to advance to the clinic.

The biggest value proposition is that using this methodology you have a much higher rate of success in producing drug candidates that are ready for the clinic. Unlike today’s processes where a huge number of programmes simply don’t produce any drug candidates that are ready for the clinic, by using a platform like ours to design the drugs, you always end up with high quality drug candidates you can advance into the clinic.

B&M: Is your platform is applicable to virtually any disease indication with known target protein structure?

AP: Our current programmes feature first-in-class oral anticoagulants for various cardiovascular indications that have demonstrated successful proof of concept in preclinical efficacy studies and also substantially reduced risk of major bleeding relative to existing anticoagulants.

Potent kallikrein inhibitors that possess sufficient cornealpermeability and other chemical properties for administration as a potential eye-drop treatment of diabetic macular oedema.

And novel angiogenesis inhibitors with low cytotoxicity that represent a new class of potential anti-cancer therapy.

B&M: What can we expect to see from Verseon in the next 6 to 12 months?

AP: In the near term we will focus on supporting our current drug pipeline, starting additional ones, and building the infrastructure to support this.

B&M: What ambition do you hold for Verseon and what would be the key success factors to achieving this?

AP: At Verseon we are working to streamline the drug discovery process and make it a more systematic, consistent method for coming up with novel drug candidates that would be ready to enter the clinic. We will continue to build the company and drive a growing pipeline. Over time, we hope to grow into a pharmaceutical company that can have a meaningful impact on this industry and the development of future medicines.

B&M: What are the principal challenges to achieving this? 

AP: Our main competition is the traditional mode of drug discovery. However, if we can make a meaningful contribution and bring additional drug candidates into the picture, we would feel like we are doing something useful and valuable.

B&M: To close, what really excites you about potential of the business?

AP: We all rely on modern medicine to keep us living healthier, longer lives. The development of those new medicines isn’t happening quite at the rate that one would like. There are general problems with R&D productivity across the pharmaceutical industry. If we can make a difference to that, it would impact the lives of you, me and everyone else who lives in the modern world.

If we can make that difference in people’s lives through medicines that treat as yet untreatable diseases, or treat better the ones that we treat poorly today, that is something that all of us at Verseon feel would be a really exciting, meaningful contribution and it gets us up in the morning to come to work.

You can read this and 10 other exclusive executives interviews in May’s Drugs & Dealers Magazine.


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