Biotech startup Paragen Bio raises $6 million for its work fighting diseases with parasitic worms

Queensland biotech startup Paragen Bio has launched in spectacular fashion with an initial $6 million investment to continue developing new treatments for autoimmune diseases, using secretions from parasitic hookworms.

The James Cook University-based startup has received funding from US-based AbbVie Ventures, the venture capital arm of biopharmaceutical company AbbVie, as well as Australian venture capital funds OneVentures and Brandon Capital, through its Medical Research Commercialisation Fund.

The investment from OneVentures is backed by the Australian government’s Biomedical Translation Fund, a fund pegged for investments in therapeutics and medical devices with a clear commercial pathway, or that are close to clinical development stages.

Paragen Bio may have only just launched, but co-founder and head of research Alex Loukas, who is also a full-time professor at the university, tells StartupSmart work has been “ticking along” on the project for the past seven years.

“We always wanted to do a startup,” says Loukas, but the team was aware they “didn’t just have one lead product”.

After discussing the potential with the team and the university, it was decided that this was more than an “intriguing university product”.

“The conclusion was that [we] really needed to start a spinout — and to get the right partners on board.”

While Loukas says he could have considered a direct research funding collaboration, the innovation going on in the lab, and the “substantial investment that was required”, made the program well-suited to launching as a startup.

Paragen Bio is working on “potentially the next generation range of therapeutics”, Loukas says.

The startup is developing treatments for autoimmune diseases, such as asthma and rheumatoid arthritis, using the secretions of hookworms — intestinal parasites that has been found to have natural therapeutic properties that defend against autoimmune diseases.

While there are examples of using secretions or venom to develop medicines, this is the first time anyone has used worms. It’s that development that Loukas says has attracted the three large investors, and significant funding.

“It’s a big enough breakthrough that it’s done something very few biotechs in Australia have done,” he says.

“We’re at a very early stage to have attracted investment from three big investors.”

The funding is pegged for pre-clinical development, and for taking the product forward into phase one trials.

That’s an expensive process, Loukas says, but there is also scope to increase the number of products the startup is creating.

There’s a “plethora of molecules we have to filter through,” he says, which could have “therapeutic potential in a whole suite of diseases”.

Loukas is an academic researcher and Paragen Bio is the first business venture he’s embarked upon. He’s learnt a few things from his first time raising capital.

When giving academic presentations, he would usually start with the virtues of the parasites, before moving on to the product. But when pitching to pharmaceutical companies and VCs, he found “they’re not so interested in the parasite story”.

Investors want to know what you have to offer, he says.

“Lead with the product,” he says.

“Send a short, snappy message across that hooks [them], rather than talking about parasites for 20 minutes.”

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