VC-Backed Life Sciences Companies Get Fresh Cash

by: The Burrill Report

By Marie Daghlian

May ended with a slew of venture-backed companies receiving fresh capital to move development of their products. Medtronic (NYSE:MDT) made the biggest investment, putting $70 million into Israeli medical device company BioControl Medical. It was an unusual type of investment because the company’s previous investors opted for a direct investment with an option to acquire the company rather than a typical financing round.

BioControl makes devices that are designed to control muscles through nerve stimulation. The money will be used to finance clinical trials of its implantable device to treat heart failure through nerve stimulation of the heart muscle instead of directly aiding the heartbeat. Medtronic will have an option to acquire the company for $550 million if it obtains U.S. Food and Drug Administration approval for its cardiac device. If BioControl fails to complete all the trials for its devices or obtain FDA approval for them, Medtronic may still acquire the company for $350 million.

Medtronic’s investment in BioControl is its second major move in the Israeli life sciences market. It follows the acquisition of Ventor Technologies for $325 million, and the establishment of an innovation center for seeking technologies of interest.

Clovis Oncology’s success has spawned a new oncology-focused biopharmaceutical company formed to acquire, develop and commercialize cancer therapeutics and supportive care products. Boston-based Tesaro secured $60 million in start-up funding: $20 million in a series A financing that included New Enterprise Associates and Tesaro management, and $40 million held in reserve by NEA to support company growth.

Tesaro was founded by Lonnie Moulder, Mary Lynne Hedley, and Rick Rogers, former executives of MGI Pharma, an oncology focused biotech acquired by Eisai (OTCPK:ESALY) in 2008 for $3.9 billion. It plans to use its expertise to identify, acquire, and develop promising drug candidates and to commercialize products for the treatment and support of cancer patients.

NOXXON Pharma, a German company focused on the development of mirror image oligonucleotide therapeutics called Spiegelmers, closed a $40.7 million series D round led by new investor, NGN Capital, with participation by existing investors TVM Capital, Sofinnova Partners, Edmond de Rothschild Investment Partners, Seventure Partners, VC Fonds Technologie Berlin, Dow Venture Capital, FCP OP MEDICAL BioHealth-Trends, IBG Beteiligungsgesellschaft Sachsen-Anhalt mbH, the Dieckell Group, and others.

The funds raised will be used to advance clinical development of its three most advanced in-house programs in the fields of diabetic complications, oncology and hematology. These products are high-potency inhibitors of their respective targets, generated with the company’s technology, and marked by their biostability and an extremely low potential for toxic or immunogenic side effects.

Lake Forest, California-based ReVision Optics secured $35 million in funding led by ProQuest Investments, and returning investors Domain Associates, Canaan Partners, and InterWest Partners. The money will be used to support U.S. clinical trials of its PresbyLens conreal inlay that has the ability to reshape the eye’s cornea and correct presbyopia, a vision condition that affects all adults as they age.

Massachusetts biotech NormOxys, a company developing a novel class of small molecule drugs that enhance the body’s ability to deliver oxygen to diseased tissues, raised $17.5 million in a series B financing round that was led by new investor, Care Capital, with participation from existing venture investor Index Ventures. It brings the total capital raised by NormOxys to $30 million.

The fresh capital will enable NormOxys to advance its lead drug candidate into clinical development this year in two diseases, chronic heart failure and cancer, and complete clinical studies through proof-of-concept in both of these indications. Its lead candidate is novel small molecule discovered from NormOxys’ proprietary platform for novel oxyren drugs which enhance oxygen delivery capacity so that diseased hypoxic tissues are brought to normal oxygenation levels.

Another Massachusetts-based biotech, Logical Therapeutics, closed on a $16.9 million series C equity financing led by existing investor SV Life Sciences, and included Burrill & Company, Novo A/S and Novitas Capital. Burrill & Company is the publisher of The Burrill Report.

Logical Therapeutics is developing a family of NSAIDs (non-steroidal anti-inflammatory drugs) with modified chemical structures to reduce the gastrointestinal side effects often associated with this class of pain relievers. Its lead compound, naproxen etemesil, is currently being studied in a Phase 2b/3 comparative study in osteoarthritis patients. Completion of the study is expected in late 2010.

Deals for the Week Ending May 28, 2010

Global Venture Financings
Company Location Amount Raised ($M)
Principal Focus
Immunome Wynnewood, PA N/A Infectious disease therapeutics
NormOxys Wellesley, MA $17.50 Oxygen deficiency treatments
Logical Therapeutics Waltham, MA $16.90 Pain management
Sinapis Pharma Jacksonville, FL n/a Neurology therapeutics
Phreesia New York, NY $16.00 Healthcare IT
Biomedical Structures Warwick, RI n/a Biomaterials
Delphinus Medical Technologies Detroit, MI $8.00 Cancer imaging devices
T2Biosystems Cambridge, MA $15.00 Diagnostics
TESARO Boston, MA $60.00 Cancer therapeutics
Heat Biologics Miami, FL n/a Cancer therapeutics
Alvine Pharmaceuticals San Carlos, CA n/a Autoimmune therapeutics
ReVision Optics Lake Forest, CA $35.00 Medical devices
RF Surgical systems Bellevue, WA $2.50 Medical devices
Dune Medical Devices New York, NY $7.70 Cancer diagnostics
Gevo Englewood, CO $10.00 Renewable chemicals
Sphere Fluidics Cambridge, United Kingdom N/A Tools/Technology
Funxional Therapeutics Cambridge, United Kingdom $12.50 Anti-inflammatory therapeutics
Reinnervate Durham, United Kingdom $2.30 Tools/Technology
Biofortuna Liverpool, United Kingdom $1.60 Genotyping
Lophius Biosciences Regensburg, Germany $1.98 Diagnostics
NOXXON Pharma Berlin, Germany $40.70 Diabetes, oncology
BioControl Medical Yehud, Israel $70.00 Nerve stimulation
Aposense Petach-Tikva, Israel $3.00 Personalized medicine
Funding/Contracting Agency
Amount ($M)
Principal Focus
Cognosci Fast Forward and EMD Serono $0.33 Multiple Sclerosis
American Life Science Pharma Alzheimer's Drug Discovery Foundation $0.25 Alzheimer's
PolyMedix National Science Foundation $0.13 Cardiovascular
Human BioPlazma (Kendrion-Hungary) Hungarian government $1.60 Biological supplies
TcLand Expression (France) French National Research Agency $0.55 Biomarkers
Total Grants $2.86
Raised $M

Financing Type
La Jolla Pharmaceticals LJPC $16.30 PIPE
Cell Therapeutics CTIC $21.00 PIPE
Anandys Pharmaceuticals ANDS $12.50 PIPE
Ziopharm Oncology ZIOP $32.80 Follow-on
Abbott Laboratories ABT $3,000.00 Debt
Salix Pharmaceuticals SLXP $300.00 Debt
Alexza Pharmaceuticals ALXA $25.00 CEFF
Deal Value
in $M

Valocor Therapeutics (Canada) QLT dermatology therapeutics n/a Dermatology
ICON (Ireland) Timaq Medical Imaging (Switzerland) n/a Medical Imaging
ZyGEM MicroLab Diagnostics (New Zealand) n/a Diagnostics
Exactech Brighton Partners n/a Medical devices
Qiagen (Netherlands) ifp Institut für Produktqualität (Germany) n/a Food safety diagnostics
New Mountain Capital Covidien specialty chemicals $280.00 Specialty chemicals
Invida (Singapore) MUGI (Indonesia) n/a Pharmaceuticals
Thermo Fisher Scientific Fermentas International (Canada) $260.00 Supply/service
SonoSite Visualsonics (Canada) $71.00 Ultrasound
Syngenta (Switzerland) Maribo Seed (Nordic Sugar-Denmark) $58.90 Agbio
CrystalGenomics (South Korea) BexPharm (South Korea) n/a Specialty pharma
Life Technologies Geneart (Germany) $47.00 Synthetic genes
Devicor Medical Products Ethicon Endo-Surgery (J&J) n/a Diagnostics
Company/Licensee Company/Licenser Deal Value
in $M
Optimer Pharmaceuticals Biocon (India) n/a Pharmaceutical supply agreement
Fast Forward Five Prime Therapeutics $1.00 Multiple sclerosis alliance
Clovis Oncology Avila Therapeutics $209.00 Cancer drug partnership
Sanofi-Aventis (France) MIT Center for Biomedical Innovation n/a Research alliance
Pevion Biotech (Switzerland) CEVEC Pharmaceuticals (Germany) n/a Infectious therapeutics license
Kunwha Pharmaceutical (S Korea) BioDelivery Sciences International $1.28 Pain therapeutics license
China Petroleum & Chemical; Cofco (China) Novozymes (Denmark) n/a Biofuels demonstration plant partnership
Sanofi-Aventis (France) Nichi-Iko Pharmaceutical (Japan) $48.00 Generics joint venture