|
|
|
|
 |
|
News
August 28, 2007
Crain's Detroit Business
QuatRx preps for IPO or acquisition
By Tom Henderson
3:01 am, August 28, 2007
Ann Arbor-based QuatRx Pharmaceuticals Co., which has raised more venture capital than any company in Michigan since the National Venture Capital Association began keeping records in 1980, says it plans to go public or be sold by the end of next year.
President and CEO Robert Zerbe said the $44 million the company raised in May will fund operations until then, but that investors do not want to do another venture capital round, which would dilute their equity.
The company has raised $116.6 million from a variety of venture-capital firms since it was founded in December 2000 to develop drugs to fight endocrine, metabolic and cardiovascular diseases. The most recent was the second-largest single round of VC money ever invested in a state company, according to the NVCA.
On Wednesday, the company announced it has enrolled the last of the 827 subjects for ongoing Phase III FDA clinical trials of its first drug, Ophena, an estrogen-free therapy to treat sexual dysfunction and vaginal atrophy in post-menopausal women.
The trials, to test safety and efficacy, began a year ago with patients being treated for 12 weeks. Trial data is expected to be available by the end of the year.
If those results mirror the success of smaller Phase II trials, a second round of Phase III studies will begin next year, with company executives hoping to have Food and Drug Administration approval and be on the market in 2010.
“I think there will be multiple opportunities for QuatRx after the release of data,” said Peter Heron, managing partner of Frazier Healthcare Ventures, which is co-headquartered in Palo Alto, Calif., and Seattle. Frazier and TL Ventures of Wayne, Pa., each invested $1.5 million to launch QuatRx in 2000. Both have been part of each round of fundraising since then.
Peter Reikes is managing director in charge of health care investments for the New York City-based investment banking firm of Cowen & Co. L.L.C., which was going to be one of the underwriters of an IPO last year. QuatRx filed with the U.S. Securities and Exchange Commission in February, then withdrew the filing in July after the market for biotech IPOs cooled off.
“They are starting to attract a lot of attention because of the results of their clinical trials. It is a company that we were quite enthusiastic about last year, and they’ve made substantial progress since then, so it’s hard to imagine not being more excited today. Their story is stronger today than it was,” Reikes said.
Reikes said his company currently has no involvement with QuatRx but would like to be involved with an IPO or in helping find a buyer. “That would be up to them, but we certainly would be very interested in continuing our relationship with them. They’re working in areas that clearly have very large unmet needs.”
Zerbe said the company is working to be prepared for either a sale or initial public offering.
“We are working with banks to position ourselves for when the market is right, but we have no specific timeline,” he said. And, “Big Pharma is always interested in companies with good compounds. There’s nothing imminent, but we’ve had discussions.”
QuatRx is in Phase II studies of fispemifene, a drug for men that stimulates production of testosterone, and is in Phase I studies of a compound known for now as QRX-431, which lowers low-density lipoprotein, or LDL, the so-called bad cholesterol, and treats obesity.
A fourth compound, Asord, a treatment for psoriasis, was recently licensed to Pennsylvania-based CollaGenex Pharmaceuticals Inc. (Nasdaq: CGPI) for development and commercialization.
QuatRx is in pre-clinical development of two compounds to treat endocrine disorders in women.
The company has 53 employees, including 30 at a research facility in Turku, Finland, acquired when QuatRx bought Hormos Medical Corp. in 2005.
The founding QuatRx team are former executives at Parke-Davis and Co. in Ann Arbor who left the company after it was sold to Pfizer Inc. in 2000. They include Zerbe, who previously had been managing director of Eli Lilly’s research center in England and a senior vice president at Parke-Davis; COO Christopher Nicholas, who was vice president of global marketing at Parke-Davis; and chief science officer Stuart Dombey, a vice president of research.
Last year’s aborted IPO led to May’s $44 million round of venture capital. It was led by Venrock, co-located in New York City and Menlo Park., Calif., a first-time investor, and included 14 VC firms. Another new investor was Catella Healthcare, a VC firm in Sweden.
The State of Michigan Retirement System invested for the third time, through its position as the primary limited partner in Chicago-based Stockwell Capital L.L.C. Its Stockwell Capital Fund I has invested $486 million in 39 companies and a total of $2.3 million in QuatRx.
“For a company of this size, their roster of venture capital investors is a Who’s Who,” said Tom Hufnagel, a principal in Stockwell.
Other prominent investors in the last round included Baltimore-based T. Rowe Price, Menlo Park, Calif.-based InterWest Partners and San Francisco-based Thomas Weisel Healthcare Venture Partners L.P.
The money, said Zerbe, will finish Phase III studies of Ophena, finish Phase II studies and begin Phase III studies of fispemifene and finish Phase I studies of QRX-431.
None of QuatRx’s investors are Michigan-based VC firms.
Mary Campbell, president of the Michigan Venture Capital Association and co-founder and general partner of Ann Arbor-based EDF Ventures, the state’s oldest VC firm, blamed bad timing for the lack of an investment by her firm.
“We met with them in the very early going, but we were just raising our third fund and we didn’t have any money to invest. Afterwards, they needed more money than we could afford,” said Campbell.
“I follow them from afar, and I’ve heard only positive things about them and their strategy. They’re very highly regarded,” said Campbell. “I was excited for them when they brought in Venrock, which is one of the oldest institutional investors on the planet. Venrock has just raised a new fund and they have a lot of dry powder left, and if they like Michigan, that might be good for others of us.
“Quite frankly, it’s easier to get an investor interested in Ann Arbor if they’re already coming here, anyway. I can’t tell you how important QuatRx is as a lightning rod.”
Venrock was founded by Laurance Rockefeller, the fourth of the six children of John D. Rockefeller, in 1969. It has invested $1.9 billion in 400 companies that have resulted in 122 IPOs and 111 mergers or acquisitions. Companies it helped launch include Apple Computer Inc. and Intel Corp.
Tom Henderson: (313) 446-0337, thenderson @crain.com
|
|
| |
|
|
|
|
|
|
©2007 Michigan Venture Capital Association
|
Site Design: Defrost
Design |
|
|
|
|
|
