Aegera Hopes To Fight Cancer With $25M

In October 1999, Michael Atkin left Bristol-Myers Squibb & Co., where he was director of new products for the company’s neuroscience global marketing group and decided to head to Aegera Therapeutics, a Montreal-based technology company focused on the destruction of cancerous cells and the preservation of non-cancerous nervous system cells.

“My third day on the job, I was changing light bulbs and vacuuming carpets, getting ready for some VCs to visit me,” says Atkin, the company’s CEO. “You can’t have too much pride. You’ve got to be willing to do multiple jobs.”

Aegera, which closed a $12 million Series B round last February and has raised a total of $22 million, is trying to raise a $25 million Series C round. This time around, Atkin would like to bring in a U.S.-based venture firm as the lead investor and a new Canadian investor. Previous investors in the company, which are all expected to re-up, include the Business Development Bank of Canada, CDP Capital, Fonds de Solidarite des Travailleurs du Quebec (FTQ), Genechem Therapeutics Venture Fund, GrowthWorks, Innovatech du Grand Montreal, Investissements Desjardins, MDS Capital and T2C2/Bio 2000.

Thus far, raising U.S. venture dollars hasn’t been exactly easy for Aegera. “As an American who moved up to Montreal, I was expecting a sufficient market,” says Atkin. “There’s a very parochial market that I hadn’t counted on.”

However, J.C. Renondin, a managing director with MDS Capital, which holds a 20% stake in the company, thinks Aegera has a good chance of attracting new investors because of the poor investment environment. “More VCs are looking at more later-stage deals and the company would have to create strong visibility. They’ve got some strong assets for themselves such as the novel approach they are using to treat cancer with those specific targets,” he says.

When Aegera raises the new round of capital it will use it to bring the company’s two oncology drugs to clinical trials, which are slated to begin in the first quarter of 2004. “Our goal is to get business development revenue out of Phase II and minor revenue out of our licensing program,” says Atkin. The company’s burn rate, outside of very expensive clinical trials, is $3 million per year.

Atkin says that the success of its clinical trials and its viability on the licensing market are Aegera’s upcoming milestones in keeping up with the competition. He cites competitor Genta’s $40 million licensing deal with Aventis as a role model for doing well in the licensing business. Other competitors include Idun Pharmaceuticals, which raised $22.8 million in new venture funding last December.

While Atkin is shopping Aegera’s deal, he is also looking for companies interested in buying licenses for Aegera’s technology. The company is focused on doing business with large pharmaceutical companies based in the New York and Boston. The company touts 17 U.S. patents and has generated $1.5 million in revenue from licensing agreements last year.