Chimerix Inc. this month received a $36 million government grant to further its development of an orally administered smallpox treatment.
This new infusion far outweighs the $5.7 million that San Diego-based Chimerix has raised from venture capitalists, but the company does not view the National Institutes of Health (NIH) as a VC surrogate. Instead, Chimerix CEO George Painter says that the grant will help clear the way for a $15 million Series C funding round that he expects to start raising later this year.
Painter is betting that his company’s smallpox effort will serve as proof of a biotechnological concept to prospective investors.
The proposed drug is a modification of Cidofovir, which currently is owned by Gilead Sciences Inc. (Nasdaq: GILD) and given intravenously to sufferers of an AIDS-related eye disease called CMV retinitis.
Researchers also have found that Cidofovir has a second calling as a smallpox inhibitor, but its intravenous application and kidney-related side effects make it a poor candidate for mass distribution during a smallpox outbreak. Chimerix has licensed Cidofovir from Gilead and covalently linked a modified form of dietary fat to the drug molecule. The result is a pill-form pharmaceutical called CMX-001. Chimerix will use the NIH grant for further testing.
There is no guarantee the U.S. government will purchase CMX-001 for stockpiles at home or abroad. But even if Chimerix never makes a dime off its smallpox drug, any proven efficacy could be used to suggest similarly successful results for other Chimerix candidates.
For example, the company already is working on oral versions of treatments for macular degeneration (some animal testing conducted), multi-drug resistant HIV infections (some testing conducted in rats and mice) and viral hepatitis. Now all it needs is some extra venture capital to finish off those efforts.
“We haven’t been overly aggressive in the early stages of the company when it comes to raising venture capital,” Painter says. “We felt that if we brought in non-dilutive money to get more data, then we’d be in a more favorable position to raise capital.”
Painter says that the deal should be launched soon with a $15 million close in the second or third quarter of next year, but some existing Chimerix investors think the timetable could be a bit longer.
“I’m still not positive that we’ll raise the round,” says Tim Wollaeger, a managing director with Sanderling Ventures and a Chimerix board member since last year. “We may concentrate on the smallpox and the grant and wait a while before raising more venture capital right away.”
Either way, the company believes that it has enough cash to last until the first quarter of 2005, in part thanks to $3 million in Series B funding recently provided by existing investors Sanderling and Asset Management Co. The company also has several other grants pending.
“We are devoted to smallpox, but we are also just as devoted to our other products,” Painter says.