New Money Flows In For Avalon

Two-year-old Avalon Pharmaceuticals is hoping a $70 million Series B round — one of the largest financings done by a privately held, independent biotech company this year — will help it change the way new drugs are discovered. In doing so, the Gaithersburg, Md.-based firm’s unique approach toward cancer research is intended to yield drug candidates that could dramatically alter cancer treatment.

“We’re taking a global snapshot that asks one simple question: Can we identify drug candidates that revert oncogenic [cancer] cells to normal cells?,” said Avalon CEO Dr. Kenneth Carter.

Contrast an onco-reversion strategy against traditional approaches that seek to eradicate cancerous cells through surgery, radiation, and/or toxic drugs, and it’s easy to understand why Avalon is attracting so much industry attention.

In a financing that was almost double the $40 million Avalon’s management originally sought, the company attracted a bevy of investors led by Toronto’s CDP Sofinov, which put up an $8 million investment. Other new investors included Euclid SR Partners, AIG Global Investment Group, Hambrecht & Quist Capital Management, MDS Capital, RBC Capital Partners, Genechem, Orbimed Advisors and KBL Healthcare Ventures. Series A investors Oxford Bioscience Partners, GIMV, Forward Ventures and Emerging Technology Investors also participated in the round.

Additionally, New York-based Array Capital acted as the placement agent on the financing.

“This is a company that already has been able to achieve its second- and third-year milestones and come in under budget,” said Dr. Kenneth Sorensen, a managing partner with Array.

One key to the company’s early success, Sorensen said, is a research approach that looks at diseased cells in their entirety, rather than seeking out targets at the genetic level.

At this point, Avalon has yet to put its product through the rigors of clinical trials. But after demonstrating its ability to discover drug candidates at an accelerated pace, the company’s next goal is to partner with a larger pharmaceutical company to share the costs of clinical trials, Avalon’s Carter added.

Regardless of whether or not the company garners research partners, however, its latest venture infusion gives Avalon a three-year liquidity cushion, Carter said.

Stephen Lacey can be contacted at:Stephen.Lacey@tfn.com