Even while well-capitalized by its Sanofi partnership, Recludix conducted a Series B financing. The primary motivation was not cash, but to strategically bring investor Eli Lilly onto its cap table, diversifying its powerful network of supporters beyond its existing partner, Sanofi, who is not an equity holder.
Instead of developing another BTK kinase inhibitor, Recludix is creating an inhibitor for BTK's SH2 domain. The company believes this novel mechanism can overcome the efficacy and safety challenges that have limited kinase inhibitors in immunology indications, aiming for a best-in-class profile by targeting a different functional site on the protein.
Recludix posits that for chronic diseases, inhibiting a protein's specific function is superior to complete degradation. Degrading a protein can disrupt its other essential roles (e.g., mitochondrial function), leading to unnecessary toxicity. Inhibition offers a more targeted, reversible approach with a potentially better long-term safety profile.
Facing a difficult 2023 biotech market, Recludix pursued both venture financing and a strategic partnership simultaneously. The company ultimately chose the non-dilutive Sanofi deal, highlighting the immense value of a 50-50 US profit-sharing option on a potential blockbuster asset, which was deemed superior to taking venture funding.
Recludix succeeded in drugging SH2 domains, a target class abandoned in the 90s, by integrating five modern technologies. This platform includes proprietary DNA-encoded libraries, machine learning, a selectivity tool, novel crystallography methods, and a pro-drug approach to ensure cell permeability, demonstrating the complex approach needed for modern drug discovery breakthroughs.