GlaxoSmithKline has taken a stake worth £1.25 million ($2.06 million) in its biotech spin out company, Autifony Therapeutics, which aims to develop new treatments for hearing disorders.
Under the terms of the agreement between the two companies, GSK will receive 850,000 A ordinary shares from Autifony in exchange for precandidate voltage-gated ion channel modulator compounds, which are thought to have potential in the treatment of hearing disorders, including noise-induced hearing loss and tinnitus. The agreement also includes the compounds’ associated patent applications and data for development in hearing loss.
The investment will give GSK a 25.4% minority equity stake in the company, but this could increase in the future if a predetermined milestone is met.
Autifony was created through a funding round comprising £5 million ($8.25 million) from UK investors Imperial Innovations and £5 million from SV Life Sciences, which has offices in the UK and the US. In a statement, Imperial Innovations explained that the partnership is a novel way to establish a new company.
“This is a creative approach to building new companies, leveraging established pharmaceutical assets together with the world class scientific expertise that exists at the UCL’s Ear Institute,” Susan Searle, CEO of Imperial Innovations, said in a statement.
According to the statement, the funding will be used to accelerate preclinical development, with the goal of initiating human trials in early 2013. In addition, the Autifony team will work with experts in auditory neuroscience at the UK’s University College London (UCL) Ear Institute.
“There are currently no pharmacological treatments available for hearing loss or tinnitus despite the increasingly large numbers of patients, both old and young, that suffer from these conditions,” Autifony’s cofounder and CSO, Charles Large, said in the statement. “Autifony represents an important opportunity to bring together our drug-discovery experience with the expertise of academic groups in this field, in particular the Ear Institute. Autifony’s goal will be to find effective new medicines that can reduce the burden of suffering for this poorly served patient group.”
In its own statement, GSK said it will be eligible to receive a further 550,000 A ordinary shares if Autifony meets a predetermined milestone. At this time, there will be further investment from the existing consortium and GSK will own 13.2% of Autifony on a fully diluted basis.