Tolerx is winding down operations after more than a decade spent developing drugs for immune-related diseases, three sources familiar with the biotech's plans told FierceBiotech.
The Cambridge, MA-based company began retrenching shortly after Tolerx and its partner GlaxoSmithKline ($GSK ) revealed in March the biotech's lead drug, an anti-CD3 antibody called otelixizumab, flunked a Phase III trial in patients recently diagnosed with Type 1 diabetes.
GSK has taken over development of the drug from Tolerx, which is liquidating earlier-stage assets in its pipeline in an auction, a source with intimate knowledge of the firm said. In 2007, the London-based drug giant paid $70 million upfront and committed hundreds of millions in additional payments to Tolerx to gain certain rights to the drug.
Tolerx is now operating with a small staff, having let go most of its workers through two rounds of layoffs that took place in March and May, a former employee said. Company co-founder and CEO Doug Ringler did not respond to two emails with requests for details about the status of the biotech. Ringler's phone number at the company is no longer in service, and the firm's website has been inactive for at least a week.
Tolerx--a 2008 Fierce 15 company --had employed 70 people and brought in $150 million in investments as of early last year, Xconomy's Luke Timmerman reported  in March 2010. HealthCare Ventures, Skyline Ventures and Sprout Group are among the investors that have bankrolled Tolerx's research, which has also garnered support from the Juvenile Diabetes Research Foundation and pharma partners such as GSK and Genentech.
Founded by Ringler and the University of Oxford's Herman Waldmann in 2000, the company was built on the big idea that drugs could alter the course of aberrant immune activities, leading to new ways of treating patients with autoimmune diseases such as Type 1 diabetes, psoriasis and rheumatoid arthritis. On the flip side, other drugs in the firm's pipeline were intended to aid immune attacks against cancer and infectious diseases.
Yet Tolerx's fortunes have largely rested on the fate of otelixizumab, or TRX4, the only late-stage contender in the firm's pipeline and its only chance of getting a revenue-generating product on the market relatively soon. Those prospects dimmed in March. The antibody drug, which is intended to prevent the bad behavior of certain T cells, failed its biggest test in the Phase III trial involving 272 patients with recently diagnosed Type 1 diabetes. The disease causes the destruction of insulin-producing cells in the pancreas, making patients dependent on insulin injections to control their blood sugar, and Tolerx hoped that one 8-day course of treatment with its drug could help preserve patients' own ability to produce insulin. But the trial fell short of its primary goal of change in C-peptide, a test to measure the body's insulin production, 12 months after dosing patients with Tolerx's drug.
GSK has said it is evaluating otelixizumab, which has the potential to treat patients with autoimmune disorders other than Type 1 diabetes such as psoriasis and rheumatoid arthritis.
These are unforgiving times for biotechs that suffer major setbacks in the clinic. It would require many millions of dollars to advance one or more of Tolerx's other candidates to a Phase III clinical trial. The company said in March that it had a drug called TRX518 in early-stage development for treating cancer, as well as an anti-CD4 antibody, TRX1, which had finished Phase I to impede harmful immune activity, and two other candidates called TRX 585 and TRX 385 in preclinical development as immune boosters to combat cancer and viral illnesses.
Tolerx is now seeking buyers for its early-stage assets in an ongoing auction, said a source with knowledge of the sale plans. The source said the firm's remaining employees are expected to wrap up their work for the company in the near future.