University of Pennsylvania professor’s gene-therapy start-up raises another $50 million

Philadelphia-based Cabaletta Bio Inc., cofounded by University of Pennsylvania researchers, says it has raised another $50 million from investors to fund clinical trials and add manufacturing capabilities for gene therapies it is developing with the university specifically to fight autoimmune diseases.

The funding -- plus $38 million raised last year -- will raise Cabaletta’s profile among at least 30 gene-therapy companies that together employ more than 3,000 in the Philadelphia area. The firms are using advances developed at Penn, Children’s Hospital of Philadelphia, Thomas Jefferson University, and other institutions where doctors hope to convert insights in manipulating genetic material into successful, profitable treatments.

Cabaletta will use the money to prepare its Investigational New Drug (IND) application to the U.S. Food and Drug Administration and to start clinical trials of Cabaletta’s lead product for patients with mucosal pemphigus vulgaris (mPV), a rare condition in which painful blisters grow on patients' mucous membranes. That’s one of a group of autoimmune diseases the firm is focusing on, which also includes multiple sclerosis and lupus.

The company uses engineered immune cells (T cells) to treat certain autoimmune diseases by specifically targeting diseased cells without killing healthy immune cells that are vital for human health. The new funding will help Cabaletta expand research and manufacturing in cooperation with Penn’s Center for Cellular Immunotherapies, under newly hired company science and technology chief Gwendolyn Binder.

Cabaletta was cofounded by Penn professor CEO Steven Nichtberger, a self-described “serial entrepreneur” who formerly ran the human tissue-growing firm Tengion, was a Merck executive, and teaches classes at Wharton; and by Penn doctor-scientists Michael Milone, and Aimee Payne.

And, as part of the latest round of funding, the new investors will buy back Cabaletta shares from Penn, whose board last spring voted to invest $50 million in gene-therapy companies founded by members of its academic and medical staffs.

The new investors include Deerfield Management Co., New York; Tavistock Group’s Boxer Capital, Windermere, Fla.; Redmile Group, San Francisco; and Cormorant Capital, Boston. Other participating investors include members of the group that invested $38 million in Cabaletta last year, such as Adage Capital Management, Boston; 5AM Ventures, San Francisco; and “an undisclosed leading public equity health-care investor,” Cabaletta said in a statement.

Investment bank Cowen Inc. helped find the investors.

The company’s directors include cofounder Nichtberger; Brian Daniels, a partner at 5AM; and Mark Simon, a former Citigroup banker who heads the biotech investing group at investment bank Torreya of New York. Interim CFO is Dan Geffken, a Wharton grad and Harvard MBA who is a Boston-based biotech financial adviser. (Corrected 1/3/18; Geffken is not a director.)

Cabaletta specializes in developing T-cell therapies for B cell-mediated autoimmune diseases such as multiple sclerosis, rheumatoid arthritis, and lupus. Cabaletta’s therapeutic platform produces highly selective autologous chimeric autoantibody receptor (CAAR) T cells that precisely bind and destroy only specific autoantibody-producing B cells while sparing normal antibody-producing B cells.

The company has what it calls “an exclusive global licensing agreement and multiple sponsored research agreements" with Penn, which could potentially enrich the doctor-founders and biotech venture capitalists backing Cabaletta, if they can get regulatory approval for the company’s therapy and sell or license it.