By Brady Huggett
Ontogen Corp. completed a $16.4 million private offering through the sale of Series D preferred stock, money that will help the company chase its goal of being a "drug company."
"What the funds allow us to do is go forward on a number of products in parallel," said Barry Toyonaga, president and CEO of Ontogen. "The purpose of the Series D was to go confidently forward without any hesitation, to create a strong pipeline."
Lombard Odier & Cie, of Geneva, Switzerland, and the Johnson & Johnson Development Corp., a subsidiary of Johnson & Johnson, participated in the financing.
Ontogen, of Carlsbad, Calif., is a company that straddles lines. Its main programs are OntoBLOCK and OntoCHROM for synthesizing compounds and for their purification, respectively. These technologies occasionally give people the wrong picture of Ontogen, Toyonaga said.
"Sometimes we get categorized as a combinatorial chemistry or platform company," Toyonaga said. "But we are not building an instrument company. The goal is to be a drug company."
The OntoBLOCK system is a comprehensive array of software and hardware modules used for the synthesis of libraries of individual, small-molecule compounds. Ontogen applies these proprietary methods of chemical synthesis, compound analysis, biological screening and data analysis to discover and develop novel drug candidates and potential drugs for itself and for partners.
OntoCHROM is the other half. The OntoCHROM system is a high-throughput purification process, a super-critical fluid preparative chromatography instrument designed for practical purification of large chemical libraries.
"We have this process, this machine that purifies 300 to 400 compounds in an eight-hour day," Toyonaga said of OntoCHROM. "It took us two years and a group of 24 people to put it in form. The first is in the lab, and the second version we are working on."
Besides the Onto systems, Ontogen works in the area of reversing multidrug resistance, fighting complications in chemotherapy patients due to clinical resistance to many cytotoxic agents.
Ontogen has finished Phase I trials with its P-glycoprotein inhibitor, OC144-093. The overexpression of P-glycoprotein in tumor cells often is seen in cases of multiple-drug resistance. The trials were completed outside the Unites States and therefore did not require an investigational new drug application filing. Toyonaga said Ontogen will file an IND in Canada and the proceeds from the preferred stock financing will be partially used for the Phase II trials.
Ontogen has collaborations with Nippon Organon K.K., of Tokyo, through its acquisition of Kanebo Ltd.; Boehringer Ingelheim GmbH, of Ingelheim, Germany; and Novo Nordisk A/S, of Bagsvaerd, Denmark. While additional partners are an option, Toyonaga said he really doesn't believe partners are always the best idea. (See BioWorld Today, Aug. 29, 1996; and Oct. 10, 1996.)
"We are always looking for partners," Toyonaga said. "But the point is, some people don't have the luxury of keeping their products. Seeking validation through partnerships and giving away products at an early stage doesn't help build a company."
The financing helps Ontogen stay solid financially, something Toyonaga said is important when a company is considering an initial public offering.
"We are eyeing the public market, that was part of the motivation," Toyonaga said. "The funds give us the staying power to get through any dry periods. If an IPO is in the wings, you don't want to go into that process without a lot of momentum."
In the world of biotechnology, a world Toyonaga refers to as an expanding "pipe," he said the company may be able to add a valuable section.
"I look at that huge pipe and I think, 'There has to be one more piece to the puzzle,' and I think Ontogen is trying to add that piece," Toyonaga said. "We have what I believe is 'must have' technology. Others need to have this in order to participate in this big pipe thing I keep referring to."