Idun Raises $27M Tranche

When lucky lotto players hit the jackpot, they usually arrange to have their prize money given to them in installments. Many venture capitalists are taking a similar approach with their portfolio companies and funding companies in tranches.

The most recent deal to come in a tranche is the latest round of funding for Idun Pharmaceuticals. The San Diego-based drug developer, which focuses on treating liver disease, inflammation and cancer, announced it raised $27 million of a $65.5 million round of funding.

The round, which the company calls a Series B-1 round, comes after the company re-capitalized last year with a $22.8 million Series A round. Counting the remaining $38.6 million committed for the second tranche, Idun’s total venture raised to date is about $150 million.

Idun initially set out to raise a $30 million round and then later raise another venture round or partner with a large pharmaceutical partner for further financing.

“The $27 million is close to what we felt we needed to get the lead candidate through clinical milestones,” says Steven Mento, Idun president and CEO, w ho joined the company in 1997.

The company, which employs nearly 60, plans to use the first tranche of funding to get its lead compound through phase II clinical trials and to bring two other compounds to clinical trials next year. Mento says he expects those milestones to be met by the end of next year and plans on receiving the rest of the Series B round at that time.

Investors have been generous towards pharmaceutical companies so far this year. Palo Alto, Calif.-based Jazz Pharmaceuticals announced in March that it raised $250 million in a Series B round led by buyout firm Kohlberg Kravis Roberts & Co. (KKR). Victoria, B.C.-based Aspreva Pharmaceuticals $57 million Series A funding. The Sprout Group led the financing with about half of the $53 million. Beverly, Mass.-based pharmaceutical developer Inotek Pharmaceuticals closed a $20 million Series A co-led by Care Capital, Rho Ventures and MedImmune Ventures.

Idun’s Series A recap had a post-money valuation of $45 million. The Series B has a post-money valuation of between $100 million and $150 million, according to Thomson Venture Economics (publisher of PE Week).

New investor MPM Capital led the round, which also attracted new investors Sutter Hill Ventures, Prospect Venture Partners, Pacific Rim Ventures and Aberdare Ventures. General Partner Luke Evnin of MPM Capital and Managing Director Jeffrey Bird of Sutter Hill Ventures will join Idun’s board of directors.

Existing investors in the company that invested in the round include BioVeda Capital, Hambrecht & Quist Capital Management, RBC Capital Partners and Ventana Capital Management.