Today, Canaan proudly introduces Nocion Therapeutics, a Series A neuroinflammation and analgesic company discovering and developing novel pharmaceutical treatments for various indications including pain, cough and itch. The company is rapidly executing upon a new biological hypothesis of how to treat pain safely and effectively. I believe this company will make a significant difference for patients. For more information, see the press release here. Nocion is also an example of how Canaan builds new pharmaceutical companies from the ground up. In this two-part blog post, the first section reviews the underlying science and the second half offers an insider perspective on forming Nocion collaboratively with academic investigators and a venture syndicate.
Rethinking analgesics through the lens of neuroinflammation
Nocion develops targeted analgesics with the potential to be longer-acting, non-addictive and safer than the current treatment options. Building upon decades of clinical experience with broad voltage gated sodium channel (NaV) inhibitors, Nocion is bringing a novel approach of selectivity to this tried and true analgesic class. Broad sodium channel inhibitors, which inhibit all or most of the nine isoforms in the NaV family, work robustly across multiple settings. Medical and pharmacy claims databases demonstrate that millions of patients are treated with broad sodium channel inhibitors each year in the hospital and at home for conditions ranging from rare autoimmune disorders to primary care to surgical procedures.
Chronic cough, a condition that causes patients to often cough 60 to 100 time and hour for months and years, is one of the first indications Nocion is pursuing. It may seem surprising to jump from pain suppression with analgesics to cough, but cough is actually the “itch” of the lungs. If you have ever been prescribed codeine for cough, you are taking an opioid that treats the “pain” in your respiratory tract. Broad sodium channel inhibitors are already used off-label for pulmonary irritation applications and Nocion’s products will expand the clinical benefit.
The problems with the current NaV inhibitors are duration of action and selectivity. These molecules block the electrical signal and therefore sensation of pain, but often act beyond the set of nerves that are the root of the problem. They diffuse in and out of healthy neurons such as motor neurons and cardiac neurons unrelated to the source of cough, itch or pain. This lack of cellular selectivity is what causes numbness, lack of motor control and cardiac distress that patients find limiting. The diffusion and lack of durable inhibition of the channel leads to the need to keep administering the product, which is inconvenient and further aggravates the off-target effects. Our goal is to develop a once or twice daily product, which is much better than the current NaVs which stop working in hours.
Nocion’s NaV inhibitors block sensory neurons when they are sending a signal of pain. The selectivity is at the cellular level. The goal is to block the inflamed nerve, not the healthy nerve. This is a distinct approach from prior attempts to gain selectivity by targeting NaV isoforms, such as NaV1.7. Thus far, not a single isoform selective NaV has been approved or held up in large randomized clinical trials. Nature just covered this topic in detail here. Yet, broad spectrum inhibitors treat millions of patients a year. It is time to shift the focus from “off target” inhibition to “off-cellular” inhibition.
I also am encouraged that Nocion’s emerging products could replace opioid usage in some settings. Nocion’s compounds are unlikely to cross into the brain and cause addiction. As the national conversation around opioid addiction continues, this solution has the potential to stop pain without causing addiction. Tying back to chronic cough, patients with cough are looking for relief and need alternatives to hydrocodone and codeine.
While the science behind Nocion captures the imagination and the potential to impact human health is broad, the process of forming the company with Dr. Tom Beck, Executive Partner at F-Prime make this company particularly special. I want to provide my thoughts behind the formation journey and a window into how Canaan builds new drug discovery companies.
Investor vs entrepreneur vs investor-entrepreneur
Popular shows like Shark Tank create the perception of a combative relationship between venture capitalists and entrepreneurs. Staging the investors on one side of the table and the entrepreneurs on the other creates an image of power, tension and conflict. The funders vs the founders.
At Canaan, I am a partner, investor, and at times an executive in an operating role. My daily calendar often reflects these diverse responsibilities. This is most apparent when we form a new company. Over two years, Tom Beck’s and my activities ranged from negotiating a license with Harvard, hiring the senior management team, developing the operational plan, building the budget and even pitching other VCs for capital. The experience provided an opportunity to apply skills I learned at Genentech across development and commercial divisions and leverage Tom’s complementary clinical and operational depth from 20+ years in industry.
To commit the resources and time, a VC must have conviction that the sweat equity of formation will generate returns beyond that of a classic investment. There is no question that building a company requires more attention and demands trade-offs on one’s time. I decided to pursue formation as a part of my investment portfolio for two reasons. First, formation investments provide the venture fund much higher ownership at a lower cost basis than the classic Series A. This should translate into greater money on money returns in the long run. Second, the investor relationship with the executive team and scientific founders naturally becomes open, humble and built on earned trust. We work together as partners towards a common goal. Overall, I’m sold on this model of venture capital and you will see more company creation announcements from me in the future.
Canaan’s company formation style
For those of you who are familiar with the Series A life science ecosystem, there are a number of funds and individuals who focus exclusively on venture formation as a means to investing. Examples include, F-Prime, Atlas, 5AM Ventures, Frazier, Polaris, Versant, Venrock, The Column Group, Third Rock and Flagship. Each fund has a distinct style of formation honed over time.
At Canaan, the investment partners can take a direct role managing a NewCo. For example, Tim Shannon was the founding CEO of Arvinas and partnered with Craig Crews to build the company out of Yale. Canaan’s strategy reflects both our partners’ desire to get their hands dirty as well as feedback from scientific founders who find this model quite compelling. By having the leaders of the fund directly accountable financially and operationally, founders know that the company will be attended to.
In addition, Canaan syndicates our Series A investments. I value the breadth of networks, perspective and styles to strengthen the company for the long run. Yes, partnerships always require more communication, discussion and alignment and yes…we have to share the ownership. I find it is worthwhile to have diversity around the table, especially when making long term strategic decisions and recruiting the senior leadership team.
Drug development is a team sport. Nurturing a winning culture where key contributors enjoy showing up to work, behave like company owners, and strive for excellence is mission critical. The only way to foster these values is through action. “The BBC” (Dr. Bruce Bean, Dr. Bruce Levy and Dr. Clifford Woolf) are Nocion’s esteemed scientific founders from Harvard. They are scrappy entrepreneurs who leveraged grants from the Blavatnik Biomedical Accelerator and the Department of Defense to explore new chemical structures and models of neuroinflammation. They are active contributors at Nocion. Over the years, they have fundraised, edited pitches, interviewed executive candidates, reviewed data from our new chemical series, and continue to participate in strategic conversations about the future direction of the company. Their humility is inspiring and drives me to work harder for them.
Through the encouragement of the great connector, Michal Preminger, formerly Executive Director of Harvard University’s Office of Technology Development (OTD) at Harvard Medical School, I had the exceptional fortune of teaming up with Tom Beck. Partnering with Tom has been delightful and productive. We laughed about pitches to our fellow VCs, celebrated family events like marriages and the birth of grandchildren. Keeping a sense of humor throughout the process was critical to our resiliency and success. If you have the pleasure of working with Tom, be sure to ask him for musical theater recommendations in Manhattan. You will not be disappointed.
Setting up a regular cadence of weekly meetings, face to face working sessions and clear milestones was key to success since we live on opposite coasts. During the most intensive period of company formation, I considered renting an apartment near F-Prime’s offices in Cambridge because I was on the East Coast so frequently. While the constant cross-country trips could be grueling, the relationships with Tom, the founders and future management team would become the most important investment I made. Showing up in person to lend an extra set of hands, interview candidates, and just have coffee together was critical to demonstrate and deepen mutual commitment.
Recruiting and personal relationships
Every new hire at Nocion was introduced through a personal relationship. Canaan previously backed Dr. Rick Batycky when he was the founding CSO of Civitas. Rick stayed with Civitas’ lead product through the acquisition by Acorda and played a key role it its eventual FDA approval as Inbrija. He joined a rarified club of scientific founders who saw a product from bench to bedside. I had been looking for the perfect opportunity to lure Rick back to a start-up and am proud to back him as a first time CEO. Tom Beck recruited Dr. Jim Ellis early on. They had worked together at UBC on cough applications. Nocion’s biology brings Jim back to his scientific roots, when he studied afferent signaling at Johns Hopkins. Jim’s depth of different neuroinflammatory models has already paid off through the development of novel screening methods. I am particularly grateful to Jim, who was the first full time employee to sign up, and was MVP during our fundraising efforts. Jim recruited Dr. Bridget Cole, a masterful chemist, whose productivity and ingenuity has led to applause at board meetings and the decision to keep the company in stealth-mode while she filed IP. Bruce Bean recommended hires for our electrophysiology team. And so it continued.
Each candidate met extensively with the team during interviews. We screened for competency, collaboration and an inherent urgency to make progress. By staying patient and keeping a high bar, the team is both experienced and diverse. The first five employees are from different countries of origin. Our board and management team are both two fifths women. Ages span from Millennials to the Greatest Generation. The first Nocion baby has already joined the team! I am convinced that our inclusiveness will help our company win in competitive recruiting environments for years to come. Also…we are hiring! Check for postings at www.nociontx.com.
Looking forward to development
Nocion is now moving beyond formation and discovery. Soon we will be transitioning to development. I am grateful to have shared this experience with such tremendous leaders and look forward to many more years together. Onward to the clinic!