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Biotech firms courting investors

Companies make pitch at conference

Email|Print| Text size + By Todd Wallack
Globe Staff / November 5, 2007

For 11 years, TransMolecular Inc. has been working on a promising brain cancer treatment from a substance found in scorpion venom.

Now TransMolecular, which has already raised $43 million in venture capital, hopes to raise additional funding as it embarks on pivotal clinical trials to prove the drug is safe and effective - a critical step needed to win approval to market the drug in the United States.

"For the last two years, we've tried to keep our head down," said TransMolecular chief executive E. Michael Egan. "Now it's time to put our heads back up."

TransMolecular, based in Cambridge, is one of about three dozen local biotech companies slated to speak at the Massachusetts Biotechnology Council's annual investor conference in Boston Thursday, an opportunity for small to midsize growth companies to court potential investors and partners.

The conference, called Mass Opps, comes at a time when investors are pouring money into the biotechnology industry - seeing it as potential growth area, even as some other areas of the economy have slowed.

According to Ernst & Young, the US biotech industry raised $14 billion in financing through the first half of the year, putting it on pace to beat the 2006 total by 40 percent.

"The overall picture is very strong," said Glen Giovannetti, global biotechnology leader for Ernst & Young, who is moderating a panel at the meeting. "2007 is shaping up to be a record."

Even so, there isn't enough money to go around, because drug discovery and development is so expensive. It can take more than $1 billion to bring a drug to market, Giovannetti said, forcing companies to constantly raise additional capital.

At this year's investor conference, most presenters are small publicly traded companies, including Alseres Pharmaceuticals Inc. of Hopkinton, Momenta Pharmaceuticals Inc. of Cambridge, Oscient Pharmaceuticals Corp. in Waltham, and Synta Pharmaceuticals Corp. in Lexington. The largest is Vertex Pharmaceuticals Inc., the Cambridge company whose market value has rocketed to nearly $4 billion on hope for its experimental hepatitis C drug, telaprevir.

But there are also a number of private companies like TransMolecular presenting, giving investors a rare peek into some emerging local biotech companies.

Bind Biosciences Inc. chief executive Glenn Batchelder said the conference will mark the first time his Cambridge company has publicly presented details of its work.

"Mass Opps is always a great venture," he said. "You get a mix of venture capitalists, Wall Street investment bankers, and potential partners in a reasonably intimate setting."

Batchelder said the company is close to completing a round of venture funding. But he said the conference is a chance to raise its profile, which could help it attract future investors, partners, employees - and even pave the way for an eventual initial public stock offering.

Like another Cambridge biotech company, Alkermes Inc., Bind is trying to find better ways to deliver drugs - rather than trying to invent new drugs. Bind is focused on using nanotechnology to concentrate drugs in the areas affected by a disease, where they can be most effective. The company was cofounded by MIT professor Robert Langer and Harvard Medical School assistant professor Omid Farokhzad.

Meanwhile, Dynogen Pharmaceuticals Inc. in Waltham, which has already raised $67 million, is trying to raise additional money to further develop promising drugs. The drugs have been tested in clinical trials to treat irritable bowel syndrome, overactive bladder disorder, and nocturnal gastroesophageal reflux disease (often associated with heartburn).

"Mass Opps is a great place to connect with people," said Lee R. Brettman, Dynogen's chief executive. "It is a great place to tell your story."

Of course, some pitches - like one involving scorpion venom - stand out.

TransMolecular says it got its start in 1996 in Birmingham, Ala., based on research done at the nearby University of Alabama. The company's drugs are based on a substance called chlorotoxin, a chain of amino acids found in the venom of the deathstalker scorpion. Researchers have found the substance is useful as a drug because it binds to tumor cells. By attaching a radioactive chemical to the substance and injecting it in the body, TransMolecular hopes to deliver a fatal blast of radiation directly to the cancerous cells.

Egan, TransMolecular's chief executive, said the company moved to Massachusetts two years ago.

The drug has already shown positive results in small clinical trials and the company is now in talks with the Food and Drug Administration about launching a broader clinical trial to prove it can effectively treat certain kinds of deadly brain cancer.

Todd Wallack can be reached at twallack@globe.com.

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