Acologix recently set out to raise $20 million when for a Series B venture capital funding. It came home with about $40 million. No casinos were involved. It was simply venture capital’s enthusiasm for pharmaceutical deals.
New investor Nomura Securities led the round and was joined by other new investors Nomura Research and Advisory Co., Softbank Investment, SMBC Capital and Tokio Marine and Fire Insurance Co. Investors that participated in the Series B and helped to fund the previous round are AquaRIMCO and JAIC America. Between one-fourth and one-third of the Series B came from previous investors while new investors provided the rest.
The Emeryville, Calif.-based company develops therapeutics for treating kidney and bone disorders. Founded in 1992, it generated $4 million in working capital during its early years by doing consulting work for other pharmaceutical and biotechnology firms. All the while it has worked on research to discover its own compounds.
Acologix raised a $5.1 million Series A in late 2000, which grew to a total of $7.6 million with add-on funding over the next three years. The post-money valuation of the Series A round was between $20 million and $25 million. While the company declined to reveal the valuation of the Series B round, the company said it was an up round.
The company is backed by predominantly Japanese venture investors. Yoshi Kumagai, president and CEO of Acologix, says that the strength of biotech in Japan is what prompted the company to favor bringing on Japanese investors.
“If you look around the different markets all over the world, the willingness or fever to invest in the biotech area is highest in Japanese markets,” says Kumagai. He also adds that having strong Japanese investors while being a U.S.-based company provides Acologix with the options of going public in either the U.S. or Japan. Kumagai says that the earliest the company would go public is the second half of 2005.
Kumagai says that the company will use the funding for additional research and development – namely bringing further compounds to clinical trials. Most of the funding will go towards accelerating the Phase II clinical development of AC-100, the company’s drug to treat osteoporosis. Acologix plans to start Phase I clinical trials next year for another osteoporosis drug and another one that helps treat renal disease.
Acologix has 10 full-time workers under its roof now and expects to grow to 25 by the end of next year. While the company brought in less then $1 million in revenue last year from licensing, it expects to bring in at least “several million” in revenue per year going forward, says its CEO. The company also says its future profitability will be determined by what, if any, partnership it can reach with a larger pharmaceutical provider.
The Acologix announcement kicked off another banner week for venture pharmaceutical investing announcements. Later last week Cambridge, Mass.-based Microbia announced it raised a $40 million fourth round of venture backing from Alton, BioOne Capital, Invus, Linkagene and Paperboy Ventures as well as a host of previous investors that included Aberdare Ventures, BancBoston Ventures and Venrock Associates. Microbia, which develops anti-infective drugs, has raised more than $105 million in venture funding since its 1998 founding.
Meanwhile, Merrimack Pharmaceuticals, which is also based in Cambridge, Mass., said it raised $28 million in Series C funding. New investor Sorenson Development led the round that included GTC Biotherapeutics, Unilever Technology Ventures Fund and previous investors. Merrimack develops drugs that treats autoimmune diseases.