CHAPEL HILL, N.C. … Ercole Biotech, which was spun out of the University of North Carolina early last year, has signed a major development deal with Isis Pharmaceuticals (Nasdaq: ISIS) to discover antisense drugs that regulate alternative RNA splicing.

“This is very significant for us,” Ercole President Athanasios Maroglou tells LocalTechWire. “This gives us everything we need to be successful in drug discovery.”

Through the collaboration, which has been under discussion for about a year, the companies will focus their complementary expertise in alternative splicing and leverage Isis’ antisense technology to expand the potential of antisense drugs in treating disease.

Alternative splicing is a natural process in which a single gene can encode multiple related, yet distinct, protein products. During RNA splicing, most mammalian genes are interrupted by pieces of DNA, which are selectively removed during the maturation of RNA transcribed from a gene.

Cells may remove and splice together different segments of RNA from the same gene, resulting in alternatively spliced gene products. In many cases, the alternative spliced products can have very different biological effects, with one form contributing to human disease and another form preventing disease. Between 40 and 60 percent of human genes have alternative splice forms.

Antisense is the only drug discovery technology able to target a gene’s messenger RNA in a sequence-specific fashion, and thus regulate alternative splicing, which could potentially control disease.

Isis gets a stake

Ercole will handle much of the biology work in the drug discovery process, while Isis handles the chemistry, Maroglou says. The venture will first concentrate on treatments for breast, prostate and liver cancer, using Isis’ Bcl-x preclinical antisense drug, which inhibits the production of splice variants of the Bcl-x gene, which helps regulate programmed cell death, he says.

Isis will take an ownership position in Ercole as part of the agreement. Maroglou declines to state the size of the initial investment but says it is in the form of convertible debt. Ercole is seeking $10 million in first-round funding, and Isis’ investment will convert to an equity position when that round closes, which officials hope will occur within six to nine months, he says. The Carlsbad, Calif.-based company also has an option for an additional investment in Ercole.

Also, C. Frank Bennett, Isis’ vice president of antisense research, will join Ercole’s scientific advisory board under the agreement.

Ercole, which has six employees and still does much of its work in UNC labs, has funded its operations to date on an undisclosed amount of financing through angel investors, he says. The company expects to move into its own labs and hire more researchers and administrative personnel early next year, he says.

Ercole has been built around technology developed by Ryszard Kole, a professor in UNC’s Department of Pharmacology and the Lineberger Comprehensive Cancer Center. By targeting compounds that interfere with the RNA maturation process, Kole and his collaborators have corrected the expression of defective genes in cellular models of cystic fibrosis, Duchenne muscular dystrophy and prostate cancer.

Isis has commercialized its first product, Vitravene, to treat retinitis in AIDS patients. The company also has 13 antisense products in its development pipeline, with two in late-stage development and five in Phase II human clinical trials for cancer, Crohn’s disease and other ailments.

Ercole Biotech:

Isis Pharmaceuticals: