ARYx Heads To Lab with $55M

The latest avalanche of venture capital dollars in pharmaceutical land has descended on a Santa Clara, Calif.-based company that develops safer drugs through improved design. ARYx Therapeutics announced last week that it closed a Series D round of $55 million.

New investor Nomura Phase4 Ventures led the round. The London-based firm was joined by JAFCO Life Science Investments, Scottish Widows Investment Partnership, Montreux Equity Partners, Novel Bioventures, Itochu International, ATEL Ventures, MPM Capital, OrbiMed and Merlin BioMed.

Venture capital has flowed freely into pharmaceuticals all year. Cambridge, Mass.-based Microbia announced it raised a $40 million fourth round of venture backing. Microbia, which develops anti-infective drugs, has raised more than $105 million in venture funding since 1998.

Meanwhile, Merrimack Pharmaceuticals, which is also based in Cambridge, Mass., raised $28 million in Series C funding. Merrimack develops drugs that treat autoimmune diseases. Also, Dynogen Pharmaceuticals Inc., recently raised $50 million in an oversubscribed round of Series B funding.

For ARYx, it’s Series D infusion follows a $25 million Series C round that the company raised last year. The company’s Series C post-money valuation was $40.2 million, according to Thomson Venture Economics (publisher of PE Week). David Nagler, ARYx spokesman, confirmed that the pre-money valuation of the Series D round was $45 million and said that the post-money valuation was “a healthy step up.”

The company’s Series A and Series B rounds were funded primarily by company management and angel investors.

The company says it plans to use the latest funding for further development of its two clinical programs, ATI-2042 and ATI-7505, to the point of being marketable through a large pharmaceutical partner, and to develop a third compound. The company expects to launch an IPO by the end of 2006.