Medical company CEO Lee Jones now has the capital she needs for a delicate mission.
Jones, a veteran medical industry entrepreneur, raised $25 million from venture investors to prove whether healthy microbes stripped from human feces can be used to combat a nasty gastrointestinal disease more effectively and economically than antibiotics and hospitalization.
Jones, CEO of Roseville-based Rebiotix, said the same investors who put up Rebiotix's first $5 million, came back for more. The group includes eight affluent Minnesota "angel" investors who will finance accelerated clinical research trials that they believe will catapult the promising biologic product toward commercialization.
Inaugural tests at several clinics resulted in restoration of health for some very sick patients. Now, Jones is focused on getting her development-stage company proven and commercialized as soon as possible.
"This is a blast, the most fun I've ever had," Jones said last week. "The proof-of-concept has been done at our clinical study sites. And 'fecal transplants' have been done for 50 years. We just need to make the process simple and create a consistent product that is manageable for patients and physicians.''
Rebiotix's goal is to revolutionize the treatment of challenging gastrointestinal diseases through a new category of drugs involving transplantation of live human-derived microbes. The FDA has designated Rebiotix's RBX2660 as a "fast track" product for the treatment of recurrent Clostridium difficile, or "C. difficile," a nasty bacterial infection. That designation underscores the urgent need for a new therapy, Jones said.
"Even in Silicon Valley this would be big news," said Leslie Frécon, founder and CEO of LFE Capital and a successful investor in an earlier-led Jones company, Inlet Medical. "This is very interesting. Cutting edge. But so basic because Rebiotix is recycling something organic for its healing properties that displaces antibiotic drugs and hospitalizations.''
Frécon said this is also about investing in Minnesota: "We used to be known just as a center for devices and other medical technologies."
Indeed, Shaye Mandle, CEO of industry trade group Minnesota Life Science Alley, said last week that the state, which has suffered from a several-year dry spell in medical investing, could be headed for its best year of capital raising since before the Great Recession of 2008-09.
This year alone, Rebiotix, Holaira, Inspire Medical and Tendyne have raised about $135 million.
"There is an encouraging uptick in funding in the United States, particularly in Minnesota," said Mandle. "It is definitely encouraging. And Rebiotix, a biotechnology play, is an amazing and novel treatment.''
Results of the recent multicenter clinical trial of the Rebiotix therapy will be presented in October at the annual meeting of the American College of Gastroenterology.
"We've heard from our clinical-study sites at the Mayo Clinic in Minnesota and Arizona, the University of Chicago Hospital, Henry Ford Hospital in Detroit and several other sites," Jones said. "This was a last resort for patients who had been leading miserable lives. Now they are healthier and happy."
Healthy microbes are taken from human fecal material and supplemented with other ingredients to keep them alive. RBX2660 essentially is a transplant of bacteria from a healthy person's gut to the patient's gut.
The C. difficile infection is a life-threatening disease, marked by diarrhea and abdominal pain, that is contracted by 700,000 people annually.
Jones said almost all the $25 million, in addition to an earlier round of $5.5 million came from individual investors. They include Dr. William McGuire, the former CEO of UnitedHealth Group; Michael Berman, the former Boston Scientific executive who leads investments in a number of U.S. and Israeli medical firms, and veteran investor Erwin Kelen.
Jones, 57, who holds degrees in chemical engineering and management from the University of Minnesota, spent 14 years at Medtronic until 1997.
Kelen, a former electronics-company executive and longtime venture investor, was the chairman of the Inlet Medical board in 1997 who recruited Jones to Inlet. The company barely had a pulse. Jones got it properly focused, raised capital and produced FDA-approved laparoscopic kits and a patented procedure for repairing a prolapsed uterus.
Frécon, whose fund invested in 2002, said all Inlet investors made at least a modest return on what had once been considered dead money after Jones got Inlet running. She sold it to Cooper Labs in 2006.
"Lee is not flashy, but she's a good entrepreneur who can do a lot with a little," Frécon said.
Jones was chief administrative officer of the Schulze Diabetes Institute at the University of Minnesota when she was asked to join Rebiotix.
"I knew biology has a big role in the future of medicine," Jones said. "And then this opportunity popped up."
There are several start-ups around the country that Jones considers competition.
"But they have not achieved our milestones," Jones said. "We are the only firm that has received [FDA] fast-track status. People are very excited about these new therapies. It will be competitive. We are in at the beginning of what could be an industry."