Diagnostics as Venture Investments
This article was originally published in Start Up
Executive Summary
Will the emergence of new biological targets as a result of genomics and proteomics change venture investors' prejudice against diagnostics? No--or at least not until patented biomarkers can be tied more closely to the cause of the disease and to a therapeutic that treats it.
ANSWER: No. Although diagnostics have been renamed biomarkers, the business model challenges remain. The developer of a new diagnostic is still likely to earn far less than the behemoth diagnostics company or clinical laboratory providing the new test. In addition, despite the advent of pharmacogenomics, biomarkers are unlikely any time soon to transform the process of either drug discovery or development, with the possible exception of oncology.
Despite a few unusual cases like Myriad Genetics Inc. 's BRACAnalysis and Dako AS 's HercepTest, insurers have generally resisted reimbursing biomarker-based tests at a level beyond that of traditional diagnostics. Other than "home brew" tests, which are carried out in clinical laboratories (such as genetic tests for inherited disorders) and which don't need FDA approval, gene-based diagnostic test kits are subject to an FDA approval process that is lengthier and more cumbersome than for many other kinds of diagnostics (they are regulated as PMAs, instead of as 510Ks). (See "Genetic Testing's Regulatory Quagmire," IN VIVO, December 2001 (Also see "Genetic Testing's Regulatory Quagmire" - In Vivo, 1 Dec, 2001.).)
As importantly, demonstrating molecular diagnostics' value proposition from a technology standpoint is also difficult. A biological marker can be a protein or metabolite; it can be genetic information (e.g., genetic polymorphisms, changes in the abundance of mRNA); or it can come as a combination, or panel, of the above. Regardless of its form, the discovery of its association with a disease state and the relatively straightforward development of an assay to detect its presence falls far short of answering the real question: what is the role of the marker in the pathogenesis of the disease? The considerable complexity of the cell signaling pathways associated with most diseases will cause a new diagnostic to miss patients who might benefit from a therapy if the marker only represents one arm of the pathway targeted by the product. Certainly, there can be considerable medical value to capturing an additional number of patients with a disease while it can still be cured, even if a biological mechanism of action is not yet well understood. However, the opposite circumstance is more worrisome: the same biomarker may also be observed in healthy subjects, leading to false positives, unnecessary testing, and potentially unnecessary medical procedures.
Expressed another way, a biomarker is of limited utility unless it can be used as an endpoint for a clinical trial—in short, it must have an impact on therapeutic decision-making or patient behavior. The much-publicized debate over the usefulness of prostate specific antigen (PSA) screening for prostate cancer revolves in part around the realization that PSA has no known function in disease progression. While PSA levels rise in patients with prostate cancer, they also go up in patients with benign prostatic hypertrophy and prostatitis. Nevertheless, the test is still commonly used and, admittedly, there is considerable debate whether a marker's role in disease progression has to be known for it to be valuable as a clinical assay, as evidenced by growing interest in protein-pattern analysis for cancer markers.
It is true that a few useful markers have been found, such as LDL cholesterol as a marker for atherosclerosis. In each case, the marker has also been accepted by the FDA as a clinical endpoint for the disease of interest. This is a far more significant conclusion than the observation of the presence and hence mere association of a marker with a disease. Unfortunately, markers like LDL aren't proprietary and can't form the basis of a business. So the significant challenge is identifying and patenting a marker for a disease that also has a targeted therapeutic and then selling the two products—the diagnostic and the therapeutic—in combination.
A second potential application for biomarkers is to stratify clinical trials by selecting those patients who, based on the presence or absence of a biomarker, are more likely to respond to a particular therapy (i.e., the emerging discipline of pharmacogenomics). The regulatory hurdle is significant; the FDA must be convinced that the assay for the biomarker demonstrates "reproducibility, accuracy, sensitivity, and robustness," the guidelines put forward last year by the FDA for tests based on biomarkers. A few such assays have been accepted, such as Dako's HercepTest to measure Her2/neu, which activates intracellular signaling pathways that result in cell proliferation and hence cancer. But very few markers to date permit patient stratification, and selection of patients based on the presence of a molecular marker runs the risk of leaving out large numbers of patients that might also benefit from a new therapy.
This is the nub of the problem with pharmacogenomics as an aid to clinical development: diseases are caused by complex pathologic pathways and may have multiple causes. Thus identifying one marker that is associated with an abnormality won't ensure, on its own, the safety or efficacy of a therapy and may exclude patients who can benefit from it. Pharma companies also face a competitive problem with diagnostics that can predict side effects in their drugs. Other companies can use the same diagnostic, and an understanding of the side effect's source, to design around the problem and bring out a better drug. And drug companies have worried, since the whole pharmacogenomics opportunity was raised, that a new pharmaco-diagnostic could reduce the market for the drug, and/or introduce complexity into the regulatory and reimbursement process. (See "Targeted Therapeutics: Linking EGF Receptor Drugs to Diagnostics," IN VIVO, October 2001 (Also see "Targeted Therapeutics: Linking EGF Receptor Drugs to Diagnostics" - In Vivo, 1 Oct, 2001.) and "Why Don't Big Pharmas Buy Pharmacogenomics?" IN VIVO, December 2001 (Also see "Why Don't Big Pharmas Buy Pharmacogenomics?" - In Vivo, 1 Dec, 2001.).) The few remaining pharmacogenomics companies continue to struggle to win pharma acceptance. Conversely, most pharma companies are mounting their own, internal pharmacogenomics programs and integrating them with their drug discovery processes. It is a bit like bioinformatics; accepted by pharma companies on a customized basis depending on their needs, but an unstable base on which to launch a free-standing company.
It seems that biomarkers have truly succeeded to date as a business proposition only when they have been linked to specific therapeutics and thus have direct clinical utility (e.g., Herceptin/HercepTest). The small number of other deals where a larger company has paid for exclusive access to the genes discovered by a smaller company for use as diagnostics remain either too recent to evaluate (Johnson & Johnson /Corixa Corp. [See Deal]) or are distinguished by years of silence about their progress or status (Becton Dickinson & Co. /Millennium Pharmaceuticals Inc. [See Deal]). (See "Leveraging Diagnostics in a Biotech World," IN VIVO, April 2002 (Also see "Leveraging Diagnostics in a Biotech World" - In Vivo, 1 Apr, 2002.).)
Biomarkers may be like monoclonal antibodies or other technologies that raised huge initial expectations but subsequently disappointed investors as a result of their much-longer-than-expected gestation period: venture capitalists that invested in antibody companies in the early to mid 1990s lost all or most of their money, while the venture investors that backed Abgenix Inc. and similar antibody companies in the second half of the 1990s were considered brilliant and rewarded handsomely for their investment. With luck, given the promise of the genomic revolution for earlier diagnosis of disease and smarter clinical trials, only technology maturation and therefore timing stand in the way of a biomarker company being a successful venture investment and making a contribution to medical practice. Michael Lytton is a General Partner of Oxford Bioscience Partners. Email any comments directly to [email protected].
DEALS
RECENT FINANCINGS
In Vitro Diagnostics
Nymox Pharmaceutical Corp.
(Kensington, MD) — www.nymox.com — 800-936-9669
Massachusetts General Hospital
(Charlestown, MA) —mghra.partners.org/default.htm — 617-726-8608
Nymox licenses Mass. General's cancer marker patent
Apr.—Nymox Pharmaceutical Corp. (R&D of drugs and diagnostics for the aging population) licensed from Massachusetts General Hospital rights to patents relating to markers that can potentially treat and diagnose specific types of cancer.
The company currently markets AlzheimAlert, the only noninvasive urine test for diagnosing Alzheimer's disease, as well the NicAlert and NicoMeter saliva and urine tests for detecting exposure to tobacco. It also has a pipeline of drugs in development and an antimicrobial treatment against E. coli contamination. Nymox is now conducting preclinical trials for benign prostatic hyperplasia treatments and has several antibacterials in development. In addition to the alliance, this month the company also raised $819k in a private placement.
Pharmaceuticals
Viventia Biotech Inc.
(Toronto, Ontario, Canada) — www.viventia.com — 416-291-1277
Columbia University
(New York, NY) — www.columbia.edu/cu/research — 212-854-8444
Viventia enters research collaboration with Columbia U.
Apr.—Viventia Biotech (develops drugs based on the human immune response to cancer) and Columbia University will collaborate in the discovery of new anticancer drug targets and antibody drug candidates.
Columbia's Dr. Ilya Trakht will conduct the research using his expertise in creating human hybridomas. The University will obtain lymphocytes from cancer patients and seeks to create "totally human" monoclonal antibodies that will initially be screened to identify tumor-binding qualities. Antibody candidates will then be transferred to Viventia, and screened using the company's ImmunoMine to rapidly characterize, identify, and validate those monoclonal antibodies as potential drug candidates. The company has developed the Hybridomics platform—a human immune approach that targets disease-specific antigens on cancer cells and delivers a drug lead against that target—for use in its cancer research.
Cytovax Biotechnologies Inc.
(Edmonton, Alberta, Canada) — www.cytovax.com — 780-448-0621
University of Alberta
(Edmonton, Alberta, Canada) — www.ualberta.ca/ILO — 780-492-5787
Cytovax licenses technology from U. of Alberta
May—Cytovax Biotechnologies (infectious disease therapeutics) has received an exclusive, worldwide license from the University of Alberta for its patented intellectual property on polypeptide compositions formed using coiled-coil templates.
Cytovax will pay license fees, milestones, and royalties. The company is using the technology to develop a Streptococcus pneumoniae antigen candidate for use in a vaccine and/or a monoclonal antibody drug. The coiled-coil system allows for the incorporation of microbial and nonmicrobial antigens into a small peptide template, which is based on a structure where two peptides coil together to form a rope. The natural conformation of the antigens is maintained in this template, making the antigen more likely to elicit an immunogenic response—a useful quality when developing vaccines and MAbs.
Euroscreen SA
(Brussels, Belgium) — www.euroscreen.be — (32) 2529 0011
Mount Sinai School of Medicine
(New York, NY) — www.mssm.edu/research.html — 212-659-8970
Euroscreen licenses rights to Mount Sinai's technology
Apr.—Euroscreen SA (G-protein coupled receptor (GPCR) development) has licensed exclusive worldwide rights to Mount Sinai School of Medicine 's patents pertaining to a human hormone receptor technology based on a GPCR that binds to the gonadotropin-releasing hormone (GnRH).
Euroscreen's access includes other patent applications issued worldwide that involve cloning, expression, and the modulation in screening assays of the human GnRH receptor, which has been linked to a group of diseases that include hormonally responsive prostate cancer and endometriosis. Euroscreen will use the licensed technology in its discovery and characterization of molecules that modulate the receptor and have a therapeutic effect in disease treatment. The company then intends to out-license the molecules for further development. Euroscreen will sublicense the patents to pharmaceutical companies worldwide in exchange for license fees, milestones, and royalties.
Morphotek Inc.
(Philadelphia, PA) — www.morphotek.com — 215-966-4064
Ludwig Institute for Cancer Research
(New York, NY) — www.licr.org — 212-450-1500
Morphotek, LICR collaborate on cancer antibodies
Apr.—Morphotek (genomics) and the Ludwig Institute for Cancer Research will develop monoclonal antibodies and antibody production strains to treat cancer and other diseases.
Morphotek will use its Morphodoma technology in conjunction with LICR's cell lines to create humanized MAbs to target cell surface cancer antigens. By applying the Morphodoma process to LICR's MAbs, Morphotek will make second-generation manufacturing strains that are able to produce commercial amounts of the antibody with increased affinity and/or greater specificity to target antigens. Morphotek and LICR will co-own and co-develop the antibodies through early-stage clinical trials, and Morphotek gets the right to exclusively license each Morphodoma-derived line. Earlier this year Morphotek signed an agreement with the Wistar Institute to develop monoclonal antibodies to diagnose and treat cancer.
Provid Pharmaceuticals Inc.
(Piscataway, NJ) — www.providresearch.com — 732-980-9229
University of Pennsylvania
(Philadelphia, PA) — www.finance.upenn.edu/ctt — 215-573-4500
Provid licenses U. Penn patents
Apr.—Provid Pharmaceuticals (small-molecule drug discovery) licensed exclusive worldwide rights from the University of Pennsylvania to intellectual property relating to small-molecule peptide mimetics.
The patents and pending applications covered under the license are based on research conducted by University professors Ralph F. Hirschmann and Amos B. Smith, III, both of whom have joined Provid's scientific advisory board as co-chairmen. They discovered that pyrrolinones and carbohydrate templates can act as peptide mimetics, which are able to interact with a wide range of biological receptors. The company will use the mimetics technology to identify, develop, and optimize drug candidates for multiple biological targets, and will initially focus in the areas of autoimmune and infectious diseases. In another alliance this month, Provid licensed genetic targets from Sequenom to use in small-molecule drug discovery.
Psychiatric Genomics Inc.
(Gaithersburg, MD) — www.psygenomics.com — 301-556-1300
University of Louisville
(Louisville, KY) — http://thinker.louisville.edu — 502-852-2965
Psychiatric Genomics licenses U. Louisville cell lines
Apr.—Psychiatric Genomics (genomics-based drug discovery) received an exclusive license to use several cell lines from the University of Louisville in gene and drug discovery programs focused on mental health diseases.
Psychiatric Genomics will support human olfactory neuroepithelial cell research led by the University's Dr. Fred J. Roisen. Scientists will study the possibility that patients with spinal cord injury or neurodegenerative diseases can donate their own tissue. In exchange for research funding, the company receives a license to some of the neuroepithelial cell lines for its gene discovery program that uses differential gene expression analysis to study genetic factors associated with psychiatric disorders such as schizophrenia, depression, and bipolar disorders. Psychiatric Genomics will use its Multi-Parameter High-Throughput Screening (MPHTS) system to simultaneously screen large molecular libraries in order to identify potential drug candidates for already-identified gene targets and pathways. The MPHTS system can screen multiple targets, as opposed to traditional approaches that can examine only one target at a time.
Research/Analytical
Genomatica Inc.
(San Diego, CA) — www.genomatica.com
Pennsylvania State University
(University Park, PA) — www.psu.edu — 814-865-6277
University of California
(Oakland, CA) — www.ucop.edu/ott — 510-587-6000
University of California, San Diego
(La Jolla, CA) — www.ucop.edu/ott — 510-587-6000
Genomatica licenses patents from UCSD, Penn State
Apr.—Genomatica (founded in 2000; developing computer models of cells for research purposes) licensed exclusive rights to patents from the University of California, San Diego and Pennsylvania State University .
The UCSD license covers seven inventions of Dr. Bernard Palsson, the company's chairman and acting CEO. From Penn State, it gets rights to a patent application of Dr. Costas Maranas concerning optimal performance characteristics of biochemical reactions. Genomatica's technology combines genomic, biochemical, and physiological data of the organism under investigation, and produces in silico models of cellular metabolism and regulation. The company says these models can be used in drug and agricultural research.
MetriGenix Inc.
(Gaithersburg, MD) — www.metrigenix.com — 301-987-1722
Temple University
(Philadelphia, PA) — www.temple.edu — 215-204-5732
MetriGenix, Temple University develop chips
Apr.—MetriGenix (biochip technology) and Temple University will co-develop proteomic chips for use in creating cardiovascular disease therapeutics.
Temple will provide proteins based on their relevance to congestive heart failure (CHF). MetriGenix will make Flow-thru Chips— biochips that have a larger surface area-to-volume ratio than flat surface platforms—with antibodies that monitor the chosen proteins using its 4D Assay System, which is able to provide simultaneous parallel analysis of the protein markers. University researchers will also screen about 350 archived human myocardial tissue samples with the 4D Assay System. The system combines the traditional three-dimensional platform with a fourth (active fluid control) to assist in quick, highly sensitive testing for drug discovery, high-throughput screening, and for possible disease management applications. The chips will be marketed to pharmaceutical, biotechnology, and academic researchers who are looking to determine the cellular and molecular basis for cardiovascular diseases that include CHF.
Third Wave Technologies Inc.
(Madison, WI) — www.twt.com — 608-273-8933
National Cancer Center
(Tokyo, Japan) — www.ncc.go.jp — (81) 03 3542 2511
Third Wave, National Cancer Center in Invader deal
Apr.—Third Wave Technologies (genetic analysis products) has given the National Cancer Center rights to use its Invader technology to genotype more than 100k different genetic variations in each of several hundred people in a study to determine the genetic origins of cancer.
Third Wave will receive an up-front multi-million dollar payment, sales from resulting products, and the ability to license the discoveries that the NCC makes using Invader. The Invader technology is able to complete more than 10 million genotypes per month. It has been implemented in research to perform genome-wide association studies based on patient blood samples and provides cost-effective ultra-high-throughput genotyping for genomic discovery and for personalized medicine.
TECH DEALS
In Vitro Diagnostics
EGeen International Corp.
(Redwood City, CA) — www.egeeninc.com — 650-632-4389
EGeen International gets $2mm with private placement
Apr.—EGeen International (recently founded US company focused on population genomics) has raised $2mm with its first private placement of shares to Seaf Cee Growth Fund, which contributed $1.1mm, and The Baltics Small Equity Fund, which gave $0.4mm. Other investors included Draper Fisher Jurvetson's Steve Jurvetson and Oxford Bioscience Partner's Ned Olivier.
The company will use the funds to help build the Estonian Gene Bank—it has exclusive marketing rights to its data from the Estonian government. The project will consist of gathering DNA samples from a portion of the population and entering the information into a database. EGeen will then use the database for drug and diagnostic target discovery and personalized medicine research. Estonia, located in Northern Europe, has a heterogeneous population of about 1.4 million people.
Tessera Diagnostics Inc.
(Seattle , WA) — www.tesseradiagnostics.com — 206-223-2714
Tessera Diagnostics gets $1.5mm with Series A financing
Apr.—Tessera Diagnostics, a company developing prostate cancer immunoassay diagnostics, has closed the initial portion of its Series A private placement. Lead investor Kirlan Venture Capital contributed to the $1.5mm financing. The company expects to close the round during the second quarter of this year.
The company, which was founded last year and has already licensed 21 prostate-specific genetic markers from Johns Hopkins University and the University of Pittsburgh , will use the funds to begin a research program at the University of Pittsburgh to develop its technology into diagnostic kits. Tessera's Xanthus technology can be used to differentiate between normal, benign, and cancerous prostates and may eventually be used for cancer imaging, therapeutics, and in the drug discovery process.
Pharmaceuticals
Apovia AG
(Martinsried, Germany) — www.evax.de — (49) 89899674
Apovia closes $16.9mm private placement
Apr.—Apovia AG (infectious disease vaccines) raised $16.9mm (Euro19mm) in a third round of financing led by Heidelberg Innovation. Also participating were existing investors 3i, Global Life Science Holding, Oxford Bioscience Partners, and individuals, along with new investors Genavent, Societe Generale Asset Management, and VCH Equity Group.
The company will use the proceeds for human testing of its lead technology, CorVax, and to further develop it pipeline. CorVax is an antigen delivery and immunogenic vaccine carrier platform that induces antibody production and can prime the immune system at the cellular level to the targeted pathogen. Apovia is currently developing potential vaccines against malaria (MalariVax), influenza (FluVax), travelers diarrhea (Evax), otitis media (OtiVax), and bacterial meningitis (MeningiVax). Joining Apovia's supervisory board will be Heidelberg Innovation's Berthold Hackl and Genavent's Dr. Thomas Taapken.
Arakis Ltd.
(Cambridge, UK) — www.arakis.com — (44) 1223 496070
Arakis completes $23.3mm second round
Apr.—Arakis (performance-enhanced medicines) raised $23.3mm in a second round of financing led by Nomura International. Also participating were return investors Merlin Biosciences, and MB Venture Capital, and new investor 3i.
Arakis will use the funds to advance its clinical programs through Phase II, further its preclinical trials, and improve its technologies for drug enhancement. The company currently has four ongoing clinical development projects: AD 121 in Phase I for rheumatoid arthritis; AD 177 in Phase II for psoriasis; AD 237 in Phase II for chronic obstructive pulmonary disease (COPD); and AD 313, also for COPD, which is now undergoing formulation studies. In preclinical trials, Arakis is evaluating AD 452 and KSB 307 for rheumatoid arthritis, and AD 827 and AD 729 for osteoarthritis.
BioStratum Inc.
(Durham, NC) — www.biostratum.com — 919-433-1000
BioStratum privately grosses $20mm
Apr.—BioStratum (basal lamina-derived drug discovery and development technologies) grossed $20mm in a private financing to existing investors HealthCap, MP Bio HF, Equity Resources Group, and BankInvest.
The company will use some of the money to buy biotech start-up BioCrine, an affiliate of Sweden's Karolinska Institute , and begin preclinical studies of its diabetes drug candidates. It will also further advance its own Pyridorin (now in Phase II) through clinical trials for diabetic kidney disease, and into preclinical studies for other diabetic complications—and it will begin Phase I trials for its anti-angiogenesis and antitumor drug candidate Angiocol to treat cancer. BioStratum's compounds are derived from basal lamina, a thin membrane that is present in almost all tissues and which plays a central role in mediating disease processes.
C Sixty Inc.
(Toronto, Ontario, Canada) — www.csixty.com — 416-351-0208
C Sixty raises $4mm in first round
Apr.—Canadian nanotechnology start-up C Sixty raised $4mm from private angel investors in its first round of financing. Caltrac LLC was the placement agent.
The company is developing therapeutics and diagnostics for HIV, cancer, neurodegenerative diseases, and osteoporosis. Its platform is based on the fullerene molecule, also termed the "buckyball", which is a hollow sphere made up of sixty carbon atoms that create sixty pointed surfaces to help the molecule attach to its intended target. C Sixty believes that drug development using fullerene molecules will be more successful than traditional discovery models using the benzene ring structure, which only has six ring points, because the increased number of points will aid in more effective molecular adhesion. C Sixty has nine patents on its technology, and its lead products include a photodynamic therapy for cancer, fullerene protease inhibitors for HIV, monoclonal antibodies for immunological assays, and x-ray contrast agents for angiography.
Celator Technologies Inc.
(Vancouver, British Columbia, Canada) — www.celator.ca — 604-708-5858
Celator raises $1.1mm in financing
Apr.—Canadian pharmaceutical company Celator Technologies (develops cancer therapeutics) raised $1.1mm ($Cdn1.75mm) in a private financing of common stock and convertible debt to Hearthstone Investments and Genyous Life Sciences .
The company will use the funds for future R&D, as well as towards patenting expenditures on its drug delivery technology. Celator is developing a new intravenous carrier technology to effectively transport cancer drugs directly into the tumor site. Theraplex identifies the mixture of anticancer drugs to be exposed to the tumor and formulates a single product where all the necessary drug combinations are kept together and accumulate at the site. This approach is an alternative to existing "drug cocktail" therapies that can expose tumors to ineffective drug combinations, since distribution of drugs cannot be controlled. The company is developing products it hopes will be active against major tumors such as colorectal, lung, ovarian, and advanced breast cancer.
Dynavax Technologies Corp.
(Berkeley, CA) — www.dynavax.com — 510-848-5100
Dynavax completes a $34.8mm private placement
Apr.—Dynavax Technologies, a biopharmaceutical company identifying products to treat and prevent allergies, infectious diseases, cancer, and chronic inflammatory diseases, raised $34.8mm in a private placement of Series D preferred stock. Care Capital LLC led the financing. New participants included Piper Jaffray Ventures, BioVeda, HealthCap, and Lotus BioScience Holdings. Returning investors were Forward Ventures, Sanderling, BA Ventures, WestLB Asset Management, JAFCO, Alta Partners, InterWest, Axiom Venture Partners, and Finedix. Banc of America Securities served as the placement agent.
Dynavax's development efforts are based on two proprietary approaches that alter the immune system's response in specific ways. The ISS, (ImmunoStimulatory Sequences) technology uses short DNA sequences that increase the immune system's ability to fight disease and control chronic inflammation. The company is developing ISS as vaccines against diseases such as hepatitis B and HIV. The second therapeutic approach is TZP, (thiazolopyrimidine), which inhibits the production of chemical signals such as TNF-alpha and should be useful in treating rheumatoid arthritis and Crohn's disease. These diseases are characterized by elevated production of cytokines that cause the inflammation. Dynavax has research collaborations with Aventis-Pasteur, Triangle Pharmaceuticals, and Stallergenes.
GenPath Pharmaceuticals Inc.
(Cambridge, MA) — www.genpathpharma.com — 617-250-5950
GenPath raises $15.5mm in its Series A round
May—GenPath Pharmaceuticals, a drug discovery start-up based on cancer genetics research out of Harvard Medical School , raised $15.5mm in its Series A round led by MPM Capital.
Venrock Associates, Prospect Venture Partners, Greylock, and two private investors also participated. GenPath's technology consists of in vivo models of pathways involved in the origin and growth of malignant tumors. It is a rapid system that prioritizes targets by their functional relevancy. The company says its technology may also be used for drug discovery in other therapeutic areas, such as cardiovascular, metabolic, and neurodegenerative diseases.
Hybrigenics SA
(Paris, France) — www.hybrigenics.fr — (33) 7091 2900
Hybrigenics gets $14.8mm with private placement
Apr.—Hybrigenics SA (functional proteomics) has raised $14.8mm (Euro16.8mm) with the private placement of shares to lead investor Life Sciences Partners and other new investors Banexi Venture Partners and funds managed by La Compagnie Financiere Edmond de Rothschild. Return investors IMH, Lombard Odier, and Alafi Capital also participated in the Series C financing.
The company will use the funds for its target validation programs focused on therapeutics for infectious diseases, cancer, and metabolic disorders. It will also devote some money toward exploring international marketing and medical opportunities. Hybrigenics uses its experiment and in silico technologies to study the networks of proteins and their interactions with other proteins. This process is designed to provide easier and more accurate identification, selection, prioritization, and validation of targets. Hybrigenics has signed agreements with Incyte, Merck Sharp & Dohme, Oxford GlycoSciences, and Servier.
Kinexus Bioinformatics Corp.
(Vancouver, British Columbia, Canada) — www.kinexus.ca
Kinexus completes $320k equity financing
May—Kinexus Bioinformatics, a proteomics company that specializes in supplying innovative proteomic solutions to industrial and academic clients using standardized immunoblotting screens, received $319.9k ($Cdn500k) in its first tranche of a private placement. The investment was made by a group of institutional investors, venture capital funds, and private investors that included BIRC Corp., Bio FutureFund Capital Corp., an angel investor, and the founder of Kinexus.
Kinexus specializes in proteomics and bioinformatics for the discovery and commercialization of human diagnostics and therapeutics. The company uses a proprietary service called Kinetworks, which is based on the mapping of cell signaling networks of protein kinase enzymes. The service applies screening methods to facilitate the validation of drug targets and the rapid elimination of drug leads in the early stages of the drug discovery process. Kinetworks allows researchers to undertake more comprehensive investigations of signaling proteins accurately and more cost-effectively. The company is currently working on the product development of an apoptosis screen to be released in July 2002.
Medlyte Inc.
(San Diego, CA) — www.medlyte.com — 619-594-5377
Medlyte gets $750k with Series A preferred share offering
Apr.—Medlyte (diagnostics and therapeutics for heart disease) has raised $750k with its Series A round private placement of preferred shares to Johnson & Johnson Development Corp. and Western States Investment Group. The company also received $2.8mm from a convertible debt conversion.
The company will use the funds to continue the development of a diagnostic for cardiac ischemia and to conduct animal testing on a drug candidate for myocardial infarction. Dr. Roger Sabbadini (Medlyte's president and CSO) founded the company in 1998 at San Diego State University to market his research, which pertains to the role that sphingolipids play in heart disease. Sphingolipids are multi-functional lipid mediators that rise in number and become dysfunctional during acute cardiac problems.
Microbia Inc.
(Cambridge, MA) — www.microbia.com — 617-456-3600
Microbia gets $26mm with private placement
Apr.—Microbia (antimicrobial drugs) has raised $26mm with its Series C private placement of shares to lead investor Fidelity BioSciences Group. Existing institutional investors Venrock Associates, Polaris Venture Partners, Essex Investment Management Co., Aberdare Ventures, and BancBoston Ventures, and other private investors also participated.
The company is developing therapeutics targeting biofilms, the communities of cells that enable bacteria to survive in spite of antibiotics, which can attach onto industrial equipment, medical implants, teeth, and internal organs. This bacteria is more resistant to antibiotics than bacteria circulating in a patient's blood. Microbia is collaborating with Harvard Medical School , the Whitehead Institute, Dartmouth Medical School, and other institutions on its Anti-Biofilm program. It has created antifungals it calls Anti-Invasins that stop fungal cells from going into human tissues. The company has named Fidelity Biosciences Group's president, Mark A. Peterson, to its board of directors. The company has raised $59mm since its founding.
Newron Pharmaceuticals SPA
(Gerenzano, Varese, Italy) — www.newron.it — (39) 02 966 8131
Newron raises $16.5mm in second round financing
Apr.—Italian start-up Newron Pharmaceuticals brought in $16.5mm (Euro18.5mm) through a second-round private placement led by Altas Venture and included current investor 3i Group.
Proceeds from the financing will fund ongoing Phase II studies and future clinical trials for its lead drug candidate safinamide, and clinical trials of NW-1029. Concurrent with the financing, Atlas Venture's Joel Besse will join Newron's board of directors. The company was spun out of Pharmacia & Upjohn in 1999 and focuses on the discovery and development of drugs to treat central nervous system diseases including epilepsy, pain, and neurodegenerative disorders. Safinamide is a sodium and calcium channel blocker for the treatment of Parkinson's disease and epilepsy; in preclinical studies the compound demonstrated that it has potential as a neuroprotectant. The sodium channel blocker NW-1029 is currently in preclinical trials for treating neuropathic pain and is expected to enter Phase I soon.
OxoN Medica Inc.
(San Francisco, CA) — www.oxonmedica.com — 650-869-3508
OxoN Medica raises $3.9mm in first round
Apr.—OxoN Medica (start-up researching the disease relationship between oxidative stress and physiological modulators) reports it has raised $3.9mm as part of its Series A financing.
The company was founded in 2000 by three entrepreneurial scientists, Prof. Leslie Benet, Prof. Erik Anggard, and Dr. Abdullah Haj-Yehia. Since that time, OxoN has used a combination of in-house research and in-licensing to identify four lead compounds, now in advanced preclinical work. These small molecules, created through rational drug design, have a dual mechanism of action: they inhibit pathogenic proteins (or stimulate beneficial ones) and simultaneously scavenge harmful free radicals. The multifunctional approach reflects the founders' belief that most major diseases originate from multiple factors. Initial targets include hypertension, diabetes, erectile dysfunction, angina, and asthma. Through an agreement signed in 2001, OxoN has exclusive rights to new technology and know-how coming out of Hebrew University (Jerusalem) in the field of oxidative stress regulators.
Panacea Pharmaceuticals Inc.
(Rockville, MD) — www.panaceapharma.com — 240-453-6295
Panacea raises $3mm in Series B round
May—Panacea Pharmaceuticals (cancer and CNS disease therapeutics) completed a $3mm Series B private placement to MedImmune and other previous investors.
The company will use the proceeds to further advance its human aspartyl (asparaginyl) beta-hydroxylase (HAAH) program in cancer diagnostics and to fund ongoing studies in the areas of Alzheimer's and Parkinson's diseases. Panacea has already identified two pharmacologically active compounds for treating Parkinson's disease—PAN-408 and PAN-527. In a recent deal, MedImmune licensed rights to the HAAH technology and made an initial equity investment in Panacea.
Plexxikon Inc.
(Berkeley, CA) — www.plexxikon.com — 510-647-4000
Plexxikon completes $27mm private placement
Apr.—Small-molecule drug discovery start-up Plexxikon raised $27mm in a Series B private placement to lead investor Walden International. Also participating in the round were other new investors GIMV and AM Pappas, along with return investors Alta Partners, CW Group, Advanced Technology Ventures, and Kumho Group.
Plexxikon will use the proceeds to continue developing its structure-based Scaffold Discovery Factory platform that can rapidly discover new scaffolds for pharmaceutically relevant protein families. The company will also use the funding to expand its capabilities in synthetic organic chemistry, crystallography, and informatics; to complete new chemistry laboratories; and to hire additional staff. The Scaffold Discovery Factory platform—which can simultaneously screen up to 500 compounds—integrates Plexxikon's technologies including bioinformatics, high-throughput co-complexing of ligands with proteins, large-scale protein production, high-throughput co-crystallization, use of surrogate proteins and in silico methods, and automated co-structure determination. The company brought in $8.2mm last year in its first round of financing.
Signase Inc.
(Houston, TX) — 713-792-3564
Signase raises $3.5mm in Series A round
Apr.—Signase (developing protein tyrosine kinase inhibitors) raised $3.5mm in a second round placement of its Series A stock. The investors, AM Pappas & Associates and Tripos, also participated in the company's seed financing in May 2000.
Signase, which uses chemistry-based drug discovery tools, has an alliance with Tripos (drug discovery software and services) to develop Src kinase inhibitors. Tripos is providing compound libraries and screening services, and will receive payments and sales royalties. Signase says it has met all of its milestones, including the filing of patents covering novel compounds, and that the agreement has been extended. Kinases are enzymes that play critical roles in cell-signaling pathways and are popular pharmaceutical targets. The company says that possible therapeutic areas for its discovery programs are cancer, osteoporosis, immune function regulation, and CNS disorders.
TargeGen Inc.
(San Diego, CA) — www.targegen.com — 858-678-0760
TargeGen gets $10mm with Series A private placement
Apr.—TargeGen (drugs that assist new blood vessel formation) has raised $10mm with its Series A private placement of shares to lead investor Forward Ventures. Enterprise Partners and other investors also participated.
The company intends to develop therapeutics for cancer and cardiovascular, ocular, and inflammatory diseases. It delivers selectively active agents to receptors that regulate the body's processes for forming new blood vessels. TargeGen has received rights to Merck KGAA 's vascular biology-related IP and compounds. Preliminary testing of TargeGen's compounds has shown slowed growth and development of existing tumors and reduced edema associated with stroke and infarct size with myocardial infarct. Ivor Royston, MD, a managing member of Forward Ventures, will serve as chairman for TargeGen and will be joined on the board by Enterprise Partner's Andrew Senyei, MD.
Thios Pharmaceuticals Inc.
(Oakland, CA) — www.thiospharm.com — 510-601-0935
Thios gets $15mm with Series A financing
Apr.—Thios Pharmaceuticals (drugs that target sulfation pathways) has raised $15mm with its Series A private placement of shares to lead investor HealthCare Ventures as well as Skyline Ventures and other private investors.
The company will use the funds to continue its discovery programs that focus on sulfation-controlled pathways in disease processes. Sulfation of glycoproteins occurs after the protein is biosynthesized or translated inside the cell. Later modifications have been linked to abnormal interactions between cells and growth factors, which could affect inflammation, cancer, and infectious diseases. Concurrent with the financing, Skyline Ventures' Christopher Mirabelli, PhD, will become chairman of the company.
Supplies, Equipment & Devices
Digirad Corp.
(San Diego, CA) — www.digirad.com — 858-578-5300
Digirad raises $16mm
Apr.—Digirad Corp. (nuclear imaging) raised $16mm in the first closing of its sixth financing round. Major investors included GE Equity, Merrill Lynch Ventures, and Vector Fund Management.
The company had hoped to go public in 2001 but withdrew the offering. It expects the new capital to carry it through the year 2003, supporting advanced product development and the extension of its mobile imaging services business into new geographic areas. Digirad's first marketed product is the 2020tc Imager; the first solid-state gamma camera for nuclear medicine, it detects cardiovascular and other diseases. The portable unit has been installed in 160 locations to date. Digirad's mobile service business is handling over 36,000 procedures a year. It is moving digital imaging into new venues by combining the 2020tc Imager with a chair in which the patient can sit upright; the compact and portable system makes it possible to perform imaging studies in a 7x9-foot area and does not incur room or facility preparation costs.
Ophthonix Inc.
(San Diego, CA) — www.ophthonix.com — 858-646-5452
Ophthonix Inc. raises $7.5mm in Series A
Apr.—Ophthonix (ophthalmic equipment) raised $7.5mm in a first financing round led by Enterprise Partners and Kleiner Perkins Caufield & Byers.
The company says it has breakthrough instruments for vision assessment and correction. Ophthonix expects to test for certain optical abnormalities that are ineffectively measured today and correct them to provide what it terms "super vision," or better than 20/20 acuity.
Sensors for Medicine & Science Inc.
(Germantown, MD) — www.s4ms.com — 301-515-7260
Sensors for Medicine raises $15mm in Series C placement
Apr.—Sensors for Medicine & Science (biosensors) raised $15mm through the first tranche of a private placement of Series C convertible preferred shares. The company expects to raise over $30mm by the time the last tranche is placed, probably by mid-2003.
All of the participants were returning investors: New Enterprise Associates and HealthCare Ventures led the round, and were joined by Rho Capital Partners, Anthem Capital, and Abingworth Management. Some individual investors also participated. Sensors for Medicine says this financing should allow it to finish clinical development of its implantable glucose-monitoring product. It is also developing an oxygen sensor that rapidly analyzes the breath and measures metabolic, critical care, and other respiratory functions. The company claims its technology is highly sensitive, doesn't require a lot of power, is easy to miniaturize and manufacture, and may also have applications in industrial and environmental measuring devices.
Sleep Solutions Inc.
(Palo Alto, CA) — www.sleep-solutions.com — 650-320-8090
Sleep Solutions raises $7mm in private placement
Apr.—Sleep Solutions (sleep disorder diagnostic and monitoring devices) raised about $7mm through a private placement to MedVenture Associates, J&J Development, and Thomas Fogarty, MD. All of the investors participated in the company's $8mm round in Dec. 2000.
The proceeds will help the company market its FDA-approved Sleep Solutions monitor, which is used by patients at home to help diagnose obstructive sleep apnea (OSA) and other breathing disorders. Sleep Solutions says its system is the only at-home, unattended product currently available, and it is clinically equivalent to tests used in laboratories. Physicians order the test, and the company then sends the device to the patient's home. Patients use it for three nights and then send it back to the company. The data is analyzed and the results are sent to the physician. OSA affects an estimated 18 million people in the US, and only about 5% have been diagnosed. The disorder can contribute to serious cardiovascular and central nervous system disorders, such as high blood pressure, stroke, depression, and memory impairment.
Spine Wave Inc.
(San Diego, CA) — 858-350-7950
Spine Wave raises $15mm in Series A
Apr.—Spinal repair device start-up Spine Wave raised $15mm in its Series A round co-led by Canaan Partners and New Enterprise Associates. Windamere Venture Partners, California Technology Ventures, New Venture Partners, NeuroVentures Capital, and Spring Ridge Ventures also participated.
Spine Wave was spun off from Protein Polymer Technologies in 2001 with an exclusive license to PPT's tissue adhesive technology for spinal disc applications. The adhesive is injected into the spine and was designed to function like natural disc tissue. PPT took a 33% stake in its spin-off and provided R&D help. Windamere Venture Partners as well the start-up's president, David Coats, provided some seed funding. Representatives from this current round's lead investors, NEA and Canaan, are joining the company's board of directors. Spine Wave also announced it has acquired VERTx, a device company developing a new method to repair vertebral compression fractures, which often occur in patients suffering from osteoporosis.
TissueLink Medical Inc.
(Dover, NH) — www.tissuelink.com — 603-742-1515
TissueLink Medical gets $14.5mm with Series C financing
Apr.—TissueLink Medical (surgical devices) has raised $14.5mm with its Series C financing. It placed shares with returning investors Medtronic, Vanguard Ventures, Braitec, RiverVest, Arnerich Massena & Associates, Crown Advisors, Nikko Synergy Partners, and the Rahn Group as well as new investors Frantz Medical Ventures and Legacy Health System.
The company intends to use the funds to increase its US sales force, expand its European management group, and develop new products. TissueLink Medical recently received 510(k) clearance from the FDA for its dissecting sealer that can be used on soft tissue during surgery. Medtronic's VP and chief development officer, Michael Ellwein, and Arnerich Massena & Associates' president, Tony Arnerich, will join TissueLink Medical's board of directors.
Vertis Neuroscience Inc.
(Seattle, WA) — www.vertisneuro.com — 206-728-1477
Vertis Neuroscience closes $37mm private financing
Apr.—Vertis Neuroscience (develops medical devices for CNS disorders) completed a private placement, raising $37mm. Participating in the round were new investors Johnson & Johnson Development Corp., AEA Investors, Channel Medical Partners, New Medical Technologies, SEB Asset Management, Spring Ridge Ventures, and TAT Capital, along with return investors Canaan Partners, Domain Associates, Mayfield Fund, and Foundation Medical Partners.
Vertis will use the proceeds to continue sales, marketing, and operations for its Percutaneous Neuromodulation Therapy platform and for other clinical R&D programs. Vertis PNT received FDA approval in December 2001 as a minimally invasive, nonsurgical procedure to treat lower back pain. The product delivers electrical stimulation through peripheral nerves near the spine to modify the hypersensitivity in nerve cells that transmit pain signals and cause persistent pain. The company is also developing a technology platform that can restore the function in patients suffering from injuries of the central nervous system and believes the program will advance the treatment of stroke, traumatic brain injury, and other CNS conditions.