Q&A with Matthew Scholz: How DGI’s technology expands and enhances the Immusoft platform

On March 8, one of the first companies we funded, Immusoft, announced it has acquired Discovery Genomics, Inc., bringing new expertise and technologies to its therapeutic platform. We asked Matthew Scholz, CEO, if he could share the story behind the acquisition and what it means for Immusoft going forward.

BOL: Can you give us a bit of the backstory on the acquisition of DGI? When did you first connect with R. Scott McIvor, Perry Hackett and their team?
MS: We had been collaborating with DGI for nearly two years at the time the acquisition was finalized. For some time, we had been looking for a way to engineer cells without using a virus to introduce the genetic material, and DGI — led by Scott and Perry — is well known and widely respected. Both of our companies were interested in what the other had. For Immusoft’s part, we were excited by the possibility of being able to use their Sleeping Beauty Transposon System (SBTS) with our cell programming platform, Immune System Programming (ISP™). From DGI’s perspective, when they learned of our B cell platform and our interest in MPS I, on which they had already done substantial work, they became excited by the idea of working together. DGI saw B cells as an ideal — if not the ideal — use for the Sleeping Beauty Transposon System. They wanted to see their work have meaning in the clinic, and I think Immusoft offered an opportunity to make that happen. Ultimately, both companies realized we could do more for more patients if we united under one company.

BOL: How does the Sleeping Beauty Transposon System complement your technology and expand your capabilities?
MS: The Sleeping Beauty Transposon System is a non-viral vector that can deliver genes into cells. It is vastly more scalable and much less expensive than a virus and will allow us to maximize the abilities of our own proprietary technology, Immune System Programming (ISP™), which we use to program patient cells to treat disease.

BOL: What makes it critical to your pursuit of disease treatment protocols?
MS: The Sleeping Beauty Transposon System is a genetic tool for cutting and pasting outside DNA into the chromosomes of cells. Since the transposon is just DNA — a small genetic program — itself, it is less complicated and easier to produce than a virus. Viral vectors are naturally targeted by the immune system, but the transposon doesn’t have any viral components. It is the same vector licensed earlier this year by CAR T companies Intrexon and Ziopharm for around $100M, and later picked up by Merck for almost $1B. CAR T (Chimeric Antigen Receptor T cell) therapy is a type of gene therapy that uses a patient’s modified T cells to fight cancer.

BOL: What advantages does the SBTS have over other treatment options such as AAV vectors?
MS: Being a non-viral vector, it’s possible to insert altered genes back into the body in a way that is generally thought to be easier, more scalable and less expensive than conventional gene therapy protocols that require injecting a virus into a patient. Adeno-associated virus (AAV) relies on injecting a virus into the patient, can typically only be done once and can be expensive. Even when the viral vectors are used outside the body, as is commonly done with lentiviral and retroviral vectors, when contrasted with a non-viral vector, they still cost far more to manufacture.

BOL: Which diseases will it enable you treat more effectively?
MS: All indications in our pipeline will be easier to treat with the Sleeping Beauty Transposon System: MPS I, other lysosomal storage disorders, hemophilia, and other indications such as HIV and cardiovascular disease. The beauty of Immusoft’s platform is that it can be used to treat a wide range of ailments, basically anything that can be treated by an injected biologic. Our first proof-of-concept work was actually in HIV. We produced very powerful antibodies that have been shown to protect patients, but have been unable to be elicited with a vaccine. We think a “killer app” for this platform may be producing a biologic such as follistatin to treat age-related sarcopenia (muscle wasting with age). We think it’s important to point out that we still have patent protection covering our use of viral vectors (e.g., lentivirus) and even other non-viral vectors with our system, and we remain open to using our system — or licensing others to use it — in that manner.

BOL: You’ve mentioned that both companies have a “culture of innovation.” Could you tell us what that means to you and why’s it’s important to your mission?
MS: We are doing something — and hope to do things — that no one has ever done before. So innovation and creative thinking is absolutely required and are attributes that both of our companies share. There is an interesting backstory here that deserves mention. We came to Scott — a well-respected, world-renowned scientist with immense experience — with something entirely outside the box. For his part, Scott has been doing gene therapy since I was in the womb. I believe his first paper was in the early 1980s. He has worked with the RAC (Recombinant DNA Advisory Committee) and the NIH to evaluate gene therapies. And he has made vectors for gene therapy trials.

So I think our outside the box idea was interesting to Scott initially, but it probably wouldn’t have gone anywhere without us having the MPS I data we generated with our Breakout Labs’ grant. That made us credible to Scott and DGI. Breakout Labs funded Immusoft at a time when no one else would. Scott and DGI were attracted to us in no small part because they saw the data we generated with the Breakout Labs’ grant. The bottom line: There is a direct correlation between Breakout Labs’ support of us and this acquisition several years later. The grant from Breakout Labs paid for us to do our MPS I proof-of-concept, and I think that is really what motivated DGI to give us a serious look.

BOL: What does this acquisition mean for Immusoft’s growth in the months ahead?
MS: Completing the DGI acquisition was the last milestone we needed to accomplish before raising our next round. Now that we’ve met that milestone, we expect to open our $10M Series B very soon.

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For more details about the DGI acquisition, check out recent coverage by Venturebeat, Geekwire and The Puget Sound Business Journal.