Dive Brief:

• TRex Bio, a California biotechnology company that’s partnered with Eli Lilly and Johnson & Johnson, has raised $84 million in a Series B round meant to advance its immune drug research, the company said Wednesday.
• The new funds will be used to push the company’s second drug candidate, dubbed TRB-061, into a Phase 1 clinical trial in the first half of next year. The drug is designed to treat atopic dermatitis and ulcerative colitis.
• The round adds to two milestone payments TRex earned earlier this year from Lilly when a drug the Indianapolis firm licensed entered clinical testing, and from J&J when that company exercised its option on a potential new medicine.

Dive Insight:

Immune disease drugs, from TNF inhibitors like Humira to JAK inhibitors like Rinvoq, are some of the most widely used and lucrative pharmaceutical products. But that hasn’t stopped drugmakers from pouring billions of dollars into developing new options they hope are more potent, work for more people or offer better safety.

One emerging area of research involves regulatory T cells, a immune defender that helps to regulate inflammation and tissue healing. Over the past several years, a number of startups have launched plans to use these “Tregs” to soothe autoimmune conditions such as rheumatoid arthritis and multiple sclerosis. Kyverna Therapeutics and Sonoma Biotherapeutics are among this group.

TRex, by comparison, is working on drugs that can activate Tregs. According to Johnston Erwin, TRex’s CEO, the company’s technology allows it to better study how Tregs behave in human tissue, which then informs its design of drugs that can work in new ways.

“We like to say the cells tell us the story,” Erwin said.

TRB-061, its candidate for atopic dermatitis, targets a receptor found on Tregs in the skin and gut that’s called tumor necrosis factor receptor 2, or TNFR2. It also has two more wholly owned candidates that it hasn’t disclosed details on.

TRex signed its deal with Lilly, where Erwin was formerly vice president of corporate business development, soon after it launched in 2018. Lilly picked up rights five years later to three programs, including the one it put in the clinic in June. TRex could earn further payments linked to development, commercial and regulatory milestones.

Its deal with J&J came in 2022, handing that pharma an option for an exclusive license to develop tissue-targeted drugs for immune disorders. J&J exercised its option earlier this year, giving TRex an undisclosed sum.

“We use those as opportunities for learning and observing how they work, and then we can translate that into something for our shareholders and for patients ourselves,” Erwin said.

TRex’s Series B round was led by Delos Capital, and included eight other venture firms and corporate venture arms, among them Lilly, J&J and Polaris Partners.

Venture capital firms have invested about $2.8 billion in immune drug developers so far this year, according to BioPharma Dive data.