Believing that it may have found a cure for certain types of age-related blindness, Eyetech Pharmaceuticals Inc. recently raised $108.5 million in the third-largest round of venture financing ever secured by a biopharmaceutical company.
The New York-based firm actually had nearly half of its $34 million Series B deal still in the bank when it began fund-raising on a new round expected to bring in between $50 million and $60 million, which would have helped it complete Phase II clinical trials. Intense investor interest, however, drove Eyetech to expand its fiscal horizons and secure enough capital to take it through pre-marketing and Phase III clinical trials.
“They are running so many studies that patient accrual is a significant cost, but they now have plenty of money to help them with that,” said James Garvey, managing partner with Schroder Ventures, whose International Life Sciences and International Investment Trust units pumped a combined $14 million into the multi-tranched deal.
What those studies are intended to prove is that a protein called vascular endothelial growth factor (VEGF, pronounced VEG-F), is the main culprit for a dangerous build-up of blood vessels, or angiogenesis, behind the retina that can eventually leak and cause something called the wet form of macular degeneration. Simply put, a person suffering from such a condition usually caused by advanced age (AMD) or diabetes (DME) – has experienced a loss of vision that is currently irreversible.
David Guyer, chief executive of Eyetech, estimates that there are nearly 200,000 new cases of AMD each year, and a backlog of more than 1.2 million. Moreover, those figures are expected to grow as the baby boomer generation continues to age.
“It’s not definite that VEGF is what causes AMD, but it is what is most frequently implicated,” said Edward Penhoet, a partner with Eyetech investor Alta Partners and professor of molecular and cell biology at the University of California at Berkeley. “What Eyetech has developed is an antibody that blocks the formation of the new blood vessels themselves, and it has been shown to be very effective in a number of clinical trials.”
That anti-VEGF compound, named EYE001, is given to patients via an injection into the eye’s vitreous humor between the lens and the retina. The Phase II/Phase III testing so far, however, has only been conducted with patients over 50 years of age suffering from AMD (which was once actually called “senile macular degeneration”), as Eyetech is still evaluating the possibilities of EYE001 in regard to DME.
It is also important to note that other biopharmaceutical companies, like Genetech Inc., are researching the effects anti-VEGF compounds might have on other symptoms of angiogenesis, such as tumor stimulation. While such overlap could lead to concerns over hospitals using the Eyetech technology and not its actual product, Eyetech and its investors seem confident that drug delivery issues related to some of the retina’s unique characteristics would not allow such a migration.
JP Morgan Partners led the Series C transaction with a $25 million commitment, and was joined by fellow first-time investors BB Biotech, MPM Capital, Alta Partners and existing backers Merrill Lynch and Schroder Ventures.
It is by far the largest biopharmaceutical funding of 2001, and the third-largest ever behind a $170 million Series B deal for San Francisco-based Advanced Medicine Inc. in 1999, and last October’s $150 million for Seattle-based Zymogenetics Inc., formerly known as Zymos Corp.
Eyetech is not expected to conduct another round of venture funding.