12:00 AM
Dec 19, 2005
 |  BioCentury  |  Finance

Ebb & Flow

The $30 million series B round by cardiovascular gene therapy play Celladon is not a harbinger of open purse strings for gene delivery companies. Instead, Celladon and its seasoned VC investors maintain that biology is the selling proposition, and that gene therapy happens to suit the pathway the company is focused on.

Investors in the B round were Kleiner Perkins Caufield & Byers and Domain Associates, which were joined by existing investors Enterprise Partners and Venrock. Clearly the group has been around the industry for many years and has seen gene therapy companies come and go.

Joseph Lacob, a general partner at Kleiner Perkins who joined Celladon's board, said the company's key selling proposition isn't its gene therapy technology, but the biology of its only product, Mydicar. The compound uses AAV vectors to deliver the gene coding for SERCA2a, a regulator of myocardial contractility. The aim is to improve calcium cycling in the hearts of patients with congestive heart failure (CHF). Mydicar is in preclinical development.

"I've been looking at CHF for 15 years, but have never invested in a company until now," said Lacob. "SERCA2a is what's interesting. We think it has the right biology for CHF and that gene therapy is the right technology" to deliver the gene.

Celladon COO Steven Brauer told Ebb & Flow there are two main reasons why gene therapy is the optimal approach with SERCA2a. First, he said, small molecule agonists of the target have not met with success. "There's an interaction between SERCA2a and phospholamban that makes it a problematic protein-protein interaction to target with small molecules," he said.

Although it's potentially possible to deliver the SERCA2a protein itself, Brauer noted that "a protein is only useful while it's present. Adeno-associated virus can have ongoing expression in muscle for up to five years. Long-term expression is the solution to this long-term problem."

At $30 million, Celladon's round is the second largest private financing by a gene therapy company in the last two years. Ceregene, a spin out ofCell Genesys(CEGE), holds the top spot. The company raised $32 million in a series B financing last August that included Alta Partners; MPM Capital; Hamilton Apex Technology Ventures; and California Technology Venture Partners.

IPO watch

The year started with the adage "any valuation you want as long as it's $150 million" and not much has changed over the course of 12 months. Somaxon (SOMX), likely the last U.S. biotech IPO of the year, raised $55 million through the sale of 5 million shares at $11, giving the company a post-money valuation of $198.3 million.

The price was below SOMX's previously proposed range of $13-$15. A $14 price would have meted out a valuation of $252.4 million. SOMX's lead compound is Silenor, a low-dose tricyclic doxepin that is in Phase III testing to treat insomnia. Generic doxepin is marketed to treat depression and anxiety.

The price apparently didn't leave any money on the table. In the after-market, SOMX fell $0.75 to $10.25 on the week. Morgan...

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