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Ebb & Flow

With bushel baskets of VC money chasing product companies, it's not surprising that some valuations are getting overcooked. Now some VCs are putting their money to work in select toolkit companies, because their valuations are more sensible.

Abingworth is in that camp, having just co-led a $22 million round for liquid handling technology company PicoLiter. The post-money valuation was not disclosed, but Jonathan MacQuitty, president and director of the firm's U.S. operations, noted that it was at a level that would support stepups at later rounds, which is unlike what he's seeing in the product area.

"There are ridiculously overvalued deals on the product side," said MacQuitty. "We've seen series A valuations that are 80% of Pharmion's last deal," a $65 million round that was rumored to value the company at $120 million, and brought the total raised by the in-licensing company to $90 million. "Everyone's saying that we'll be the next big in-licensing company, but guess what? There aren't enough Phase III compounds out there to do that," he said.

Pharmion is notable because it's one of the few private companies that is close to marketing a product. It has European rights to Thalomid thalidomide from Celgene (CELG), which is under review in Europe to treat both multiple myeloma and erythema nodosum leprosum (ENL), an inflammatory condition associated with leprosy. Last week it in-licensed U.S. rights to Innohep tinzaparin once-daily low molecular weight heparin from Leo Pharma, and plans to re-launch the product in the U.S. on Oct 1.

MacQuitty said his fund is mildly contrarian: "We do deals that aren't flavor of the month." Abingworth also has a history of funding both discovery tools and product companies. The firm was an investor in Aurora, an ultra-high throughput screening company that was bought by Vertex (VRTX) in 2001 for $592 million in stock (see BioCentury, May 7, 2001). More recent investments include Guava, a developer of cell analysis technology; bioinformatics company Inpharmatica; and Solexa, which is working in microarrays, chemistry

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