An estimated 1.2 million people in the U.S. will be diagnosed with cancer this year, according to CancerCare, a non-profit organization. While no company has developed a cure for the terrible disease, many companies are working hard at doing so. Novacea Inc., which develops cancer therapies, is one such company. Perhaps what makes it unique is that it has picked up $36 million in a Series B venture financing round.
New Enterprise Associates (NEA), which invested $15 million, and Versant Ventures, which took an $8 million stake, co-led the deal. Other participants included Domain Associates, ProQuest Investments, and Sofinnova Ventures.
The San Francisco-based company will use its latest cash infusion to advance DN-101, its anti-cancer drug, to Phase II clinical testing. The company’s drug is an oral therapy that will fight solid tumors and other hematologic malignancies.
“This is a product that we believe has the potential to address an unmet need in cancer therapy,” says CEO Brad Goodwin, who adds that the product’s potential competitive advantage is its ability to eliminate the need for treatment doses required for anti-tumor activity. The company expects DN-101 to hit the market by 2006 or 2007, should it succeed throughout the clinical trial period.
Michael Raab of NEA and Camille Samuels of Versant have joined Novacea’s board of directors as a result of the round, and Goodwin is enthusiastic about it. “I am very excited about having Mike Raab and Camille Samuels join our board, because they bring experience in both drug development and commercialization,” he says. Raab’s experience includes a stint as a senior vice president at Genzyme, a diagnostic product and pharmaceutical developer, and Samuels was a director of business development at Tularik, a pharmaceutical company that specializes in developing orally-available drugs
Raab, who joined NEA in June to help expand the firm’s biopharmaceutical portfolio, first learned of Novacea from his dealings with Jim Blair, a partner at Domain Associates, which led Novacea’s $12 million Series A venture round in July, 2001. Raab invested in Novacea based on both lab evidence and the strength of the company’s management team. “There is a strong and credible clinical case building for DN-101, which is being developed for large markets and serious unmet medical needs. In addition, the management team comprises a seasoned group of drug developers and biopharmaceutical executives,” Raab says.
Looking ahead, Raab does not envision product revenue until at least 2006, although he does see a chance to tap another revenue source well before that – partnerships. “For anyone with early stage clinical drugs, Novacea has the expertise to help them get those drugs to the next phase. Universities, biotechs and big pharmaceutical companies are all potential partners,” he says.
Raab estimates that Novacea will seek either another venture round or a mezzanine financing within the next 12 months, unless the financial markets have a large and swift turnaround. “This is an IPO-worthy company in a good market. But until market conditions change, it’s on the back burner,” he says.
Whether the company goes public sooner rather than later is not Raab’s chief concern. In describing the philosophy of NEA, he says “when we make an investment, we are there as true partners, to see it through.”