Monday, May 19, 2008

Cary Pharma Seeks $14M in First Round

Great coverage for Doug Cary in the WBJ:

A Northern Virginia biotech is beginning its first funding drive with an ambitious road map. Despite sluggish life sciences investments for this region, the company wants to raise $14 million by the summer to launch two clinical drug trials later this year.

Executives for Cary Pharmaceuticals Inc., currently based out of its founder's Great Falls home, are taking to hours-long plane rides in their attempt to nail down what would be its first institutional round of funding. To date, the company's cashbox has been composed of $688,000 from its principals, family and friends, nearly $625,000 in federal grants and $1.3 million from a manufacturing partner.

By adding another $14 million to that pot, Cary Pharmaceuticals said it would not need any more funds to reach profitability by the end of 2009 -- and perhaps an initial public offering or acquisition beyond that.

But for the six-person company, which has ducked under the radar for its 14-year lifetime, that's hardly easy in a region that garnered a measly 3 percent of last year's record-breaking national biotech venture capital.

Company leaders argue they have graduated from their biotech rookie years. Cary Pharmaceuticals plans by this winter to file its first request to market a drug, an oral antidepressant that it bought equal rights to with a Canadian drug developer partner, and aims to begin the first phase of clinical trials on a new hypertension pill and second phase of trials on a smoking cessation pill before the end of the year.

"It all has to do with your definition of 'early stage,'" said Doug Cary, a former Abbott Laboratories executive and president and founder of Cary Pharmaceuticals, which hired New York-based investment banking firm Bio-IB to introduce it to investors.

Cary, which licensed the hypertension drug candidate from Georgetown University, patented the antismoking drug by combining an antidepressant pill by GlaxoSmithKline PLC and hypertensive pill by Merck & Co. Inc., both federally approved drugs. The company is gearing up to test the resulting once-a-day tablet, which blocks nicotine receptors and calms cravings for what Cary said will be less than the price of a cigarette pack, on 500 smokers at five clinical sites around the country. Cary then will license out the product line to a larger drugmaker that can handle the monthly payments of a final third-phase clinical trial while paying the local company for its development trouble until then.

They're banking on -- and asking investors to bet on -- what analysts expect to be a $2.6 billion market for antismoking products by 2010. While the U.S. market is dominated by slightly lagging over-the-counter patches and gums sales, major drug companies are digging their heels in the prescription side, such as Pfizer Inc. with Chantix and GlaxoSmithKline with Zyban. Cary said it hopes to make a play for foreign smokers after getting patents in China, Taiwan, Singapore and Europe.

Though, Cary also will have to surpass a publicly traded neighbor with 10 times the employee directory. Rockville's Nabi Biopharmaceuticals is planning to enter its third, and final stage of clinical tests for NicVax, its smoking cessation vaccine, this year.

Meanwhile, Cary expects its first dose of revenue next year from an antidepressant that it's pushing toward the market with $2 million raised by its publicly traded Quebec partner Intelgenx Corp. The two companies would split sales proceeds equally under an agreement ratified last month -- proceeds that Cary plans to use to increase its employee count by 50 percent and, depending on incentives, shift to office space in Maryland or Northern Virginia.

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