Successful Commercialization of Gut Microbe Strain Could Net Mayo $55M

IPO documents reveal potential of clinic’s collaboration with Evelo Biosciences.

Successful Commercialization of Gut Microbe Strain Could Net Mayo $55M
If biotech firm Evelo Biosciences is successful enough in commercializing its lead anti-inflammatory drug candidate — made by using a strain of human gut microbe licensed from the Mayo Clinic — the Rochester institution’s ultimate payday could be as much as $55 million.
That and other information regarding Mayo’s contributions and potential financial benefits from its association with Cambridge, Massachusetts-based Evelo were revealed when the “gut microbiome” company filed for a $100 million initial public offering in April.
Exploring the connections between health conditions and the ever-shifting make-up of billions of bacteria and microbes living in the human gut – known collectively as the “human microbiome” – has been one of the more intense focuses of Mayo’s venture capital and private-sector collaboration efforts in recent years. The clinic’s leaders are all-in on the potential of discovering ways to treat everything from cancer to nutrition by via the human microbiome – a field being hailed in some quarters as the “next big thing” in biotech.
For instance, in addition to Evelo Biosciences, Mayo Clinic Ventures has invested in other human microbiome firms such as San Francisco-based Second Genome and Israeli startup Day Two.
The broad strokes of Mayo’s financial stake in Evelo were announced last year when the clinic participated in a $50 million Series B financing round. The newly-filed IPO documents now show that as part of the transaction, Mayo purchased approximately 1.66 million preferred shares priced at $1.80 each, making for a total capital investment of $3 million.
But perhaps more importantly than its stock ownership position, the IPO documents revealed that licensing and patent rights connected to one of Evelo’s lead drug candidates, dubbed EDP1815, could result in a payday of up to $55 million for Mayo, depending on its approval by the U.S. Food and Drug Administration for use against inflammation-related diseases and, ultimately, its market acceptance.
The documents detailed how EDP1815 is based on a specific strain of gut microbe developed by Mayo researchers, who found that when given orally to mice, inhibited types of inflammation driven by “Th1” white blood cells, including inflammation in joints, the skin, the gut and the central nervous system.
Evelo said it has developed a proprietary fermentation system to produce the licensed microbe in large quantities and initially will gear EDP1815 to treat skin inflammation such as psoriasis. Part of the IPO proceeds be used to initiate clinical studies of EDP1815 in psoriasis and atopic dermatitis in the fourth quarter of this year.
Ultimately, Evelo and Mayo hope the microbe-based drug will also be proven effective against a wide range of conditions associated with inflammation in which preclinical studies on mice have shown promise. This includes several types of joint inflammation, such as rheumatoid arthritis; autoimmune diseases like multiple sclerosis; and gut maladies such as inflammatory bowel disease.
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