Cambridge biotech raises $40m to test Alzheimer's drug

Bay State firms increasingly rely on venture backing

Robin K. Meray tests compounds at Link, which is developing a drug for Alzheimer's and Parkinson's. (Suzanne Kreiter/Globe Staff)

Despite turmoil in financial markets, venture capital hasn't completely dried up for the region's promising technology and biotechnology companies.

Link Medicine Corp., a Cambridge biotech company, plans to say today that it raised $40 million in additional venture funding to help launch clinical trials for its lead drug, a pill designed to treat Alzheimer's and Parkinson's diseases.

Through the first half of the year, Massachusetts companies raised nearly $1.5 billion, down about 15 percent from the first six months of 2007, according to a report by accounting firm PricewaterhouseCoopers and the National Venture Capital Association.

Venture capital is becoming increasingly important for emerging Massachusetts companies this year because it is so difficult to launch initial public offerings of stock. Several have had to withdraw or put off IPOs in the past year. The same is true in other parts of the country. For example, last week, Fluidigm Corp., a California biotechnology firm, canceled its highly anticipated IPO.

In an interview last week, Zipcar Inc.'s chief executive, Scott Griffith, said it could be another year before the IPO market improves, temporarily eliminating a key source of capital for young and growing companies. The good news, he said, is that there appears to be ample private equity available.

Griffith said the Cambridge car-sharing company has received plenty of unsolicited calls from private investors interested in the company.

"When I get that many inbound phone calls, I know the market looks pretty good," he said.

Link, founded in 2005, raised $16.5 million in two previous rounds of venture capital. The latest round was led by Clarus Ventures, which has an office in Cambridge, and SV Life Sciences, which has an office in Boston. Link has 15 employees.

Link chief executive Adam Rosenberg said venture capitalists remain highly interested in companies with "novel science in areas of high unmet need."

"It really needs to be an innovative approach," he said.

The company is focused on developing drugs to treat several neurodegenerative diseases. In addition to Alzheimer's and Parkinson's diseases, they include Huntington's disease and amyotrophic lateral sclerosis. Link said it's developing treatments that target a common feature in the maladies - the buildup of incorrectly folded and ultimately toxic proteins in nerve cells. The work is based on discoveries made by the firm's chief scientific officer, Peter Lansbury.

Rosenberg said the company's lead compound was actually licensed from a pharmaceutical company, which had unsuccessfully tested the drug in clinical trials for a different illness. He declined to name the pharmaceutical company or the drug.

Link hopes to begin new clinical trials on the unnamed drug next year, Rosenberg said.

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