Biotech Values

[DewDiligence]

EYET already has coattails, evidently:

[Privately-held Archemix hopes to capitalize on aptamer drugs and cites EYET as a trailblazer. Given EYET’s bloated valuation, it’s hardly surprising that a private company looking to IPO would want to foster such comparisons.]

http://www.boston.com/business/globe/articles/2004/04/06/drug_firm_lands_50m_in_funding/

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Drug firm lands $50m in funding

Deal reflects interest in biotech investing

By Beth Healy, Globe Staff, 4/6/2004

Archemix Corp., a private drug-development start-up in Cambridge, has landed $50 million in venture capital, providing fresh evidence that investors and venture firms are eager to fund hot biotech companies.

With its second round of funding in hand, Archemix has raised more than $100 million since its founding in 2001. It's a lavish sum and a harbinger of the success Highland Capital Partners and several other venture capitalists are betting that promising therapies will bring. The deal is expected to be announced today.

''These guys are good drug hunters, with a good record of identifying candidates," said Corey Mulloy, principal at Highland Capital in Lexington, which led the deal.

And because the firm's technology can potentially be applied to therapies for dozens of diseases, he said, ''Archemix will have multiple chances of having a successful drug in its portfolio."

Archemix, which employs 63 people in Kendall Square, is developing so-called aptamer therapies, which work like antibodies, said chief executive Errol De Souza. But they are able to target diseases faster and with fewer side effects, and are less expense. Aptamers, he said, use bits of DNA or RNA, which attach to target molecules with greater efficiency than many of today's drugs.

Some cancer drugs, De Souza said, ''are so toxic you don't get enough into the tumor. We can get more in, and we can reduce the side-effect profile."

Archemix's story has a whiff of Internet-era momentum about it. The company has secured or applied for more than 170 patents for aptamer therapies; a company with one aptamer-type drug, Eyetech Pharmaceuticals Inc., went public in January and jumped 54 percent in its first trading day. Shares of the New York City company were up 50 percent for the year yesterday, at $31.58.

It is clear that Archemix's executives and financial backers are heartened by the market success of another company in a field they argue Archemix is bound to dominate.

And the market's broader appetite for biotech offerings appears strong: Yesterday, Memory Pharmaceuticals Corp., of Montvale, N.J., was the 11th medical IPO of the year; its shares rose 20 percent, closing at $8.40. [This stat is misleading because Memory Pharmaceuticals slashed their IPO price at the last minute from $13-15 to $7, which almost assured a first-day rise.] That's the best first-day performance for a biotech initial public offering in two months, according to Thomson Financial.

Laura Hodges Taylor, a partner at the Boston law firm Goodwin Procter, said it's not just the IPO market that's driving biotech deals. It's the fact that so many millions of dollars have been raised by venture firms over the past few years -- and that new life-science funds continue to be raised.

''Some of these funds are huge," Hodges Taylor said. ''I think people still see life sciences as the future technology with upside. It's going to be a major part of the economic growth of the next decade."

Biotechnology was by far the briskest area of venture investing in New England last year, as firms poured $802 million into life-science deals, or nearly one in every three dollars invested. By contrast, the software sector, generally the Boston area's strongest start-up realm, raised $593 million, according to PricewaterhouseCoopers, an accounting firm that tracks venture activity.

The big risk with biotech firms, which is often even more pronounced than at high-tech start-ups, is that it often takes years for investments to pay off. ''Like the Internet, these things don't have instant revenues," said Hodges Taylor.

Highland's Mulloy said Archemix has something of a headstart in that its founding technology was developed at the University of Colorado 14 years ago. Aptamer therapies are ready for prime time, he said. The company's first drug, an anticoagulant for coronory [sic] bypass surgery, is scheduled to go to clinical trials this year.

Other venture firms in the deal include Atlas Venture, Prospect Venture Partners, Schroder Ventures Life Sciences, Rho Ventures, Care Capital, MDS Capital, POSCO BioVentures, and US Trust Private Equity.
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