By Randall Osborne
West Coast Editor
Its trademarked "extreme genetics" approach bagged $45 million in a private placement for Xenon Genetics Inc., the largest such financing ever for an independent Canadian company not on a public market.
Vancouver, British Columbia-based Xenon plans to use the cash for advancing a full pipeline of products, built partly from a merger late last year. Targets include cardiovascular, metabolic, neurological and ocular diseases.
"One of the reasons Xenon was as successful as it was in this financing is that investors could see we are extremely product oriented," said Frank Holler, president and CEO. "High-quality companies can raise money, even in difficult conditions."
The money provides "36 months plus" of operating funds, said Leonard Cox, director of finance and administration for Xenon. It also will help develop Xenon's worldwide network of clinical populations and databases, expand its facilities in Vancouver and Montreal, and pursue general corporate aims.
Holler said the company is "very focused on clinical genomics, with outstanding access to materials and information around the world. Not to sound immodest, but I don't think there's another company that has this broad access."
Extreme genetics involves the study of phenotypes at the furthest reach of interest, where outside factors are less likely to play a part, and where rare disorders, caused by a single gene, often are implicated. "You don't get the environmental noise," Holler said.
Xenon's discovery of the ABC1 gene, linked to HDL cholesterol levels, helped the company to a $57.7 million deal last year for a single product in cardiovascular disease with Warner-Lambert Co., of Morris Plains, N.J., a subsidiary of New York-based Pfizer Inc., an investor in the private placement. (See BioWorld Today, May 26, 2000.)
Said Cox: "Pfizer has confidence in the company, and we were talking about them taking an equity position in the company when we were negotiating the original agreement [with Warner-Lambert]."
The cardiovascular effort, he added, is "our lead program at this point. It has been advanced quite significantly, in terms of going through screening to identify compounds for optimization." Cox said he could not be more specific.
Holler noted that, in a separate effort toward lowering triglycerides, "we developed an assay against the target, and we're discussing partnerships with other parties in that program and others."
In November, Xenon bought RGS Genome Inc., of Montreal, for an undisclosed amount, which added the neurology programs. (See BioWorld Today, Nov. 17, 2000.)
"We're in the process of setting up our Montreal research facility, where we're going to base our neuroscience program," Cox told BioWorld Today. "We're also going to be expanding our Vancouver facility quite dramatically this year."
Xenon has eight disease-related genes, two validated as drug targets, as well as 14 genomic linkages to diseases that the company is exploring.
"We're trying to move each one of those forward," Cox said. "You can well imagine that the company has a roadmap that we've laid out for ourselves. As we travel down that path, it may lead us to different opportunities."
JP Morgan H&Q, of New York, acted as placement agent for the offering, to an international syndicate of institutional investors and venture capital firms. Lead investors were Fidelity Management & Research Co., of Boston, and Invesco Private Capital, of New York.
New investors include JP Morgan Partners, of New York, Novo A/S and Pfizer. Shareholders making follow-on investments include InterWest Partners, of Menlo Park, Calif.; Royal Bank Capital Partners, of Toronto; GrowthWorks Capital, of Vancouver; and Ventures West Management, also of Vancouver.
"If you look at the group that's involved, these are some high-quality names," Holler told BioWorld Today. "Not only do they have deep pockets, but these are extremely experienced, sophisticated health care investors, to help us build the company. They bring an understanding of the industry, a 'Rolodex.'"
Holler said the company is planning an initial public offering in the next 12 to 18 months. n