VentiRx Pharmaceuticals Inc. derives its name from the large coffees - "venti" in Starbucks lingo - imbibed by its founding team. Perhaps that habit contributes to the speed at which the company moves. In the eight months since its founding, VentiRx raised a $2.3 million seed round, followed it with a $26.6 million Series A financing and identified a Toll-like receptor platform for acquisition.
The new Series A round was co-led by Frazier Healthcare Ventures, ARCH Venture Partners and Domain Associates, all of which also participated in the seed funding.
Michael Kamdar, executive vice president and chief business officer of VentiRx, said the lack of a single lead investor for the Series A is just one way in which the company is nontraditional. "We didn't have to deal with who was going to lead," Kamdar said, citing a high level of commitment and enthusiasm from all three investors. "Everyone said, We want to back this company,' not We want to be called this or that.'"
VentiRx's founding was also somewhat untraditional in that it centered on a management team, not a technology or product. Frazier and ARCH teamed up with Kamdar and Robert Hershberg, who now serves as VentiRx's executive vice president and chief medical officer, to pursue a shared interest in innate immunity.
Kamdar's experience and interest in the field stemmed from his previous position as senior vice president of corporate development and finance at Anadys Pharmaceuticals Inc., where he led a $570 million partnership with Novartis Pharma AG focused on TLR7 drugs. Hershberg hailed from Dendreon Corp., but previously led a TLR research program at Corixa Corp. before its acquisition by GlaxoSmithKline plc.
"It really was an idea of building a company around people," Kamdar said. He added that the approach has worked before for Frazier with companies such as Trubion Pharmaceuticals Inc. and QuatRx Pharmaceuticals Co. and that the investors were "confident we could identify assets with our collective experience base."
It looks as though that confidence was well founded. Hershberg said the company would announce the acquisition of "a family of small molecules targeting TLRs" within the next month. Although they declined to provide specifics, Kamdar and Hershberg said the series of compounds would include agonists and antagonists with applications in multiple therapeutic indications such as cancer and infectious, respiratory and autoimmune diseases.
TLRs, which are involved in triggering innate immune responses, are a hot area for drug development. In addition to the aforementioned half-a-billion-dollar deal between Anadys and Novartis, Coley Pharmaceutical Group Inc. signed a $505 million deal with Pfizer Inc. for its lead TLR program; Idera Pharmaceuticals Inc. got a $455 million deal with Merck & Co. Inc. based on TLRs; Dynavax Technologies Corp. inked a $136 million deal with AstraZeneca plc for TLR development; and Hybridon Inc. entered a $136 million deal with Novartis for TLR drugs. (See BioWorld Today, March 25, 2005; June 2, 2005; June 3, 2005; Sept. 8, 2006; and Dec. 12, 2006.)
Despite all the excitement, the emerging field already has had its fair share of setbacks. Earlier this year, Coley suspended development of its TLR9 drug Actilon in hepatitis C virus and Dynavax announced it couldn't measure Phase III efficacy results with its TLR9 allergy drug, Tolamba. Anadys also had to suspend dosing of its lead TLR7 drug, ANA975, in HCV. (See BioWorld Today, June 27, 2006; Jan. 9, 200; and Jan. 24, 2007.)
"We're very encouraged by recent successes and cognizant of the challenges," Hershberg said. "We think we can navigate around the failures."
After completing the acquisition of its product pipeline, VentiRx plans to expand its four-person management team to about 10 employees by the middle of the year. The company is based in San Diego but also maintains facilities in Seattle, providing the "opportunity to pull from both talent pools," Kamdar said.
Hershberg added that the company is "pursuing talent from ICOS due to the Eli Lilly acquisition," in the Seattle area.
Yet VentiRx doesn't plan to grow too much. The company will hire seasoned executives, including drug development experts, but outsource remaining development activity to maintain capital efficiency.
"It's out with the old, in with the virtual," Kamdar said, adding that a capital-efficient business model will allow the company to deliver high returns even if exit valuations evolve lower. He estimates that the Series A financing will last through late 2009 with a virtual business model.
One position not on the list of new hires is CEO. Kamdar and Hershberg agreed that they have no plans to recruit a CEO from the outside, nor is either of them eager to take the reins just yet. "We're equals, and we're going to build this and drive it together," Kamdar said.
In other financing news:
• SemBioSys Genetics Inc., of Calgary, Alberta, said the syndicate of underwriters for its recent offering, led by Raymond James Ltd., exercised its overallotment option to purchase 1.1 million additional shares at the offering price of C$3 per share. That will generate an additional C$3.2 million in gross proceeds, bringing the total gross proceeds from the offering to C$15.9 million (US$13.5 million). The company also recently raised C$8.3 million in a secondary offering, bringing the total gross proceeds from all recent financing activities to approximately C$24 million.
• Upstream Biosciences Inc., of Vancouver, British Columbia, secured $2 million in equity financing, half of which was received and half that would be received within 30 days if certain milestones are met. The two closings each will involve 666,667 units, with each unit consisting of one common share, one share purchase warrant priced at $1.75 and one share purchase warrant priced at $1.85. The unit price is $1.50 each. Proceeds from the financing will be used to validate the company's genetic markers and drug-response assays.