By Mary Welch

Triad Biotechnology Inc. raised $12 million through a private financing, one of the largest start-up financings in the biopharmaceutical industry in recent years.

"The money raised was twice as much as we originally set out to raise," said Stephen Coutts, Triad's founder and chief operating officer. "When we first went around to investors we were told they liked our technology but not our business model. We changed our business model so that, although we are a volume drug-discovery business - a real drug-discovery engine - that can provide inhibitors in a very short time, we will not develop our own drugs. We will license chemical leads to others."

That change in focus helped attract investors.

"My impression is that investors are more interested in processes rather than companies that discover drugs," Coutts said. "The risks are too great and there's been too many failures. It also keeps a company's money tied up for several years as the drug goes through the clinical trial process. It's either feast or famine, and there's been too many famines."

Among the investors were Skyline Ventures, of Palo Alto, Calif.; GeneChem Technologies Venture Fund, of Montreal; Hambrecht & Quist Life Science Investors, of Boston; Hambrecht & Quist Healthcare Investors, of Boston; and Lombard-Odier, of Zurich, Switzerland. Twelve million shares of Series A preferred stock were offered.

Coutts, former chief financial officer of La Jolla Pharmaceutical Co. in San Diego, and Daniel Sem, one of the senior scientists at La Jolla, started working on a new company about a year ago. Sem is the inventor of Triad's technology. "We put together our ideas, filed patents and got the money," he said.

Triad, based in Rancho Santa Fe, Calif., is defining new ways of discovering high-affinity inhibitors for important enzyme targets. Using protein nuclear magnetic resonance (NMR) methodology, Triad will construct focused combinatorial libraries of small molecules, with each library specific for a gene family.

The technology is based on NMR-guided, integrated, object-oriented pharmacoengineering (IOPE), which integrates combinatorial chemistry, informatics, structural biology and enzymology to generate drug leads quickly.

"IOPE is a way of discovering drugs with high-affinity inhibitors for certain targets," Coutts said. "We use NMR to provide guidance of constructing small combinatorial libraries that are highly focused. Essentially, we speed up the discovery of inhibitors for certain types of protein targets and use NMR to guide us in our chemistry."

The company has four employees now but expects to have about 25 by the end of the year.