What do you get when you cross $16 million in venture capital, a veteran pharmaceutical executive and three well-known drugs developed by Seattle-based Immunex Corp.? The answer is, Xanodyne Pharmacal Inc.
While such a business venture may sound trivial, Florence, Ky.-based Xanodyne’s cause is not. Its products, aimed at oncologists and pain management specialists, are designed to fight cancer and cancer-related ailments.
With assistance from HealthCare Ventures, Essex Woodlands Health Venture, Blue Chip Venture Company and Union Spring LLC, each of which put up $4 million, former Richwood Pharmaceuticals CEO Roger Griggs was able to get Xanodyne up and running.
Additionally, since Xanodyne used the proceeds from its first round to acquire Immunex products that have been on the market since the 1960s and, hence, are familiar to doctors and patients, the company has already posted a profit.
“The idea is to make money and be profitable but we are not averse to spending money to make the company right,” said Tom Jennings, a principal with Union Springs and Xanodyne’s acting chief financial officer. “From the standpoint of working capital, we will never have to go back to the VCs. But as we grow, if we don’t have sufficient cash, we will raise future rounds.”
Jennings noted that it seems likely that Xanodyne will take another dive into the private equity pool, as the company expects to acquire more products before deciding on an exit strategy.
“We don’t tie ourselves to [an exit strategy],” Jennings said. “We focus on running the company and building the company up. All we do is position it properly so we can have an IPO if we choose.”
He added that the company’s immediate expansion plans include hiring between 25 and 30 employees as quickly as possible. However, the exact number of new hires will ultimately depend on the size of the sales force, which will be driven by how much opportunity there is in the field, Jennings said.
While marketing Xanodyne’s cancer products may seem like a no-brainer, it actually isn’t. The company must struggle to be noticed in a sea of other pharmaceutical companies touting similar products.
In an effort to keep competition to a minimum, however, Jennings said Xanodyne plans to steer clear of larger pharmaceuticals companies.
“We would get squashed. We picked a particular niche and are dedicated to growing it,” he said.