By Randall Osborne
A tight financing market for biotechnology firms did not deter privately held Ontogeny Inc. from raising $28 million in a private placement.
"We've raised $53 million in financings in the last 18 months," said Doros Platika, president and CEO of Cambridge, Mass.-based Ontogeny. "We want to make sure that, when we go public, it's at a significant valuation that is sustainable."
The company focuses on developmental biology, which is the study of how a single cell becomes a person. Fewer than 100 molecules of 10 to 15 families are believed to be involved in the formation of critical organs and parts of the body. (See BioWorld Today, Jan. 6, 1997, p.1.)
Platika said Ontogeny will use the money four ways.
"First, we want to industrialize, speed up and enhance our target identification and validation," he said. "That's where our strength is. A lot of it is being done by hand, but we've added a few robots."
Secondly, the company wants to "enter into some more-creative deals, joint ventures, things where we retain more downstream value," Platika said.
Ontogeny's two strongest collaborations are a potential $40 million agreement focused on bone and cartilage disorders with Boehringer Mannheim GmbH, of Mannheim, Germany; and a research pact with Biogen Inc., also of Cambridge, to investigate the role of the Sonic hedgehog protein — so named because of its bristly appearance — in the development of crucial neurons in the brain. (See BioWorld Today, Oct. 8, 1996, p. 1.)
Late last year, the Boehringer pact was extended by 18 months, increasing the potential revenues to Ontogeny by 300 percent, Platika said.
The third use of the funds will be to form a "consortium" around Ontogeny's program for basal cell carcinoma and keep the program in-house, without a partner, Platika said.
"We've identified, with collaborators, some of the key molecules that regulate skin and hair growth, which are impaired and damaged in basal cell carcinoma," he said. Though not as deadly as melanoma, basal cell skin cancer is the most common of all cancers, Platika noted.
Fourth, Platika hopes to interest other smaller companies with solid technologies in sharing them, on a "product-by-product" basis.
"People in the past have not been very open to that," he said. "Each one has jealously guarded its own technology. I hope that, in this kind of financial atmosphere, there'd be a lot more receptivity."
Approach Starts With Molecule Families
Platika said Ontogeny's approach is somewhat different, centering not on applications and then searching for molecules, but starting with the family of molecules — in this case, the hedgehog family. Sonic is one of three mammalian homologues of the Drosophila (fruit fly) hedgehog protein; the others are Desert and Indian.
Last year, Ontogeny bought from Cambridge, Mass.-based Genetics Institute Inc. (GI) an exclusive, nine-month licensing option for an undisclosed protein from GI's DiscoverEase library of novel secreted human proteins.
Ontogeny chose the protein using its OntoScreen assay system, which includes traditional and proprietary assays for determining expression patterns of genes during development and in adult organs.
"We're still working together on it," Platika said of the GI deal, while seeking other opportunities.
The company expects to have "another four or five announcements in the next couple of weeks, and maybe a few in January, although these things have a way of blowing up at the last minute."
Meanwhile, the financing, led by Seattle-based Vulcan Ventures, lets Ontogeny end the calendar year with about $50 million in cash, and a net burn of less than $10 million.
"We don't need the money to meet payroll, so we can do partnerships for all the right reasons," Platika said. *