Tucson-based AmpliMed, which faculty at the University of Arizona formed 12 years ago, raised a $5.5 million Series A round of financing. The company develops cancer-fighting drugs.
AmpliMed’s lead product, Amplimexon, is in clinical trials. The company, which has a staff of about seven, began searching for a Series A round this past January. Previously, the company received funding from the University of Arizona in the form of $50,000 in seed money, the National Institutes of Health (NIH), which gave the company grants totally about $2 million in value, and from Vestar, which invested $2 million over six years.
Valley Ventures led the Series A round with an investment of about $1.9 million. Valley was joined by Biotech Insight Management, Invest Bio, Solstice Capital and Village Ventures, which was a latecomer to the round with $200,000. The round is being held open until Jan. 8, 2004 and has a goal of $8 million. The round had a pre-money valuation of less than $5 million.
“There is still a terrible paucity of good quality drugs that are working in the cancer space,” says Larry Aldrich, a general partner with Valley Ventures and an observer on AmpliMed’s board. “There are a lot of drugs but there’s a lot of unmet need. The amazing thing in the drug development business is that it really isn’t a market issue. It’s technology. If the products work, the market is large.”
Aldrich says that the University of Arizona, which is Tucson’s major technology center, has produced a lot of investment-worthy technology that is often overlooked by VCs.
“Tucson and Arizona generally are a little off the map and there are great opportunities for locally based venture investors,” he says. “It’s a little more challenging to convince investor sources that there’s real technology coming out of other places than California or New York or Boston.”
With only a handful of employees, AmpliMed is mostly a virtual company. Contractors and independent drug evaluators conduct clinical trials, which is common even for large pharmaceutical corporations. Aldrich says the company’s burn rate is between $200,000 and $250,000 per month. The biggest challenge for the company will be to prove its viability in clinical trials, he says.
“Our hope is that the end of the first two years of funding we want to be in phase II with two drugs,” says Dr. Evan Hersh, AmpliMed’s president and CEO. So far they are on track. The company’s first drug, Amplimexon, started phase I trials this year and will likely begin phase II trials next year.
This coming January, the company will be announcing the hiring of a new CEO, who has already been selected.
After the new CEO comes on board, Hersh will switch to vice president for medical affairs. Hersh doesn’t expect to have more than between 10 and 12 employees next year and anticipates seeking a Series B round in September 2005.
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