LONDON - Genomics company Oxagen Ltd. raised £8.2 million in a second-round funding, just a year after it was established with £4.2 million in seed finance. The 1997 financing was expected to last until Oxagen signed its first pharmaceutical partner.
Trevor Nicholls, CEO of Oxagen, based in Abingdon, U.K., told BioWorld International that once the company began operations the directors rapidly realized they needed to raise more money. “To be competitive in worldwide genomics you need to have some significant resources,“ Nicholls observed. “We felt we needed extra funding.“
Of the £4.2 million start-up money, £2.2 million was in equity and £2 million was in debt guarantees. “The rationale of this was to limit management dilution, and it provided a good start-up structure. But we decided in November  we would rather not be operating with a debt guarantee,“ Nicholls said.
The original backers, the London-based research foundation the Wellcome Trust, the University of Oxford, in the U.K., and two private business angels, all have increased their investments. In addition, the venture capital companies 3i plc and Advent Ltd. have invested for the first time.
Nicholls said Oxagen received a number of approaches from venture capitalists “who were very keen to invest in genomics.“
Nicholls said this is due in part to the progress of peers such as the French company Genset SA, of Paris, and the Icelandic company deCode Genetics Inc., of Reykjavik. “In particular,“ he noted, “deCode's deal with Roche shows the strength of the family approach.“ The February 1998 deal with Hoffmann-La Roche Ltd., of Basel, Switzerland, is worth a potential $200 million to deCode.
Oxagen aims to identify genes responsible for common human diseases, including osteoporosis, coronary heart disease, endometriosis and inflammatory bowel disease. Its approach is based on information from the U.K.'s National Health Service, which provides complete records, from birth to death, of a large, heterogeneous population which is not interbred and features a wide range of ethnic backgrounds and social classes.
In addition to this comprehensive data, Oxagen has access to high-throughput screening developed at the Wellcome Trust Centre for Human Genetics at Oxford University.
While it does not have proprietary screening technology, Oxagen does have access to the University's expertise in the most effective use of existing technology.
The new funding will be used to double analytical capacity to 3 million genotyping reactions per annum, and to strengthen capabilities in functional genomics. The company also intends to build up its bioinformatics capability. Staff will increase from 30 to as many as 50 by the end of 1998.
Since its formation, Nicholls said Oxagen has made rapid headway with its five disease gene programs. “We have made particularly good progress in inflammatory bowel disease and are moving rapidly towards cloning the genes.
“I still believe very strongly in the power of the approach we are taking,“ he added, “and this is demonstrated by the progress in inflammatory bowel disease.“
Nicholls said Oxagen is “very close“ to signing its first deal with a pharmaceutical company. It expects to run two or three of its five programs in collaboration with a pharmaceutical partner. *