VentureBeat

TODAY’S HEADLINES:

• Quark Pharma gets $27M for RNAi drugs (release)
• TargetRx takes in $9.6M for physician-prescribing data (release)
• D-Pharm raises more than $3M for fat-like drugs (release)
  
• Vortex Medical raises $2.3M for medical devices (VentureWire)
• Specialty pharma Ascio takes in $3M (VentureWire)
• Keraderm gets $1.7M for antifungal drugs (VentureWire)
• Contract researcher CTMG raises $500K toward $1M round (VentureWire)
• Singapore’s Progeniq raises seed funding for life-science computing (release)
• Acrongenomics scuttles Molecular Vision acquisition (peHUB)
• Michael Gutch joins H.I.G. Ventures (release)

Quark Pharma gets $27M for RNAi drugs – Fremont, Calif.-based Quark Pharmaceuticals, a biotech startup working on “RNA interference” drugs, raised $27 million in an eighth funding round. The company’s fundraising follows a failed attempt to go public last year, and reflects a somewhat smaller haul than the $30 million it had hoped to raise.

The company’s backers include investment vehicles of SBI Asset Management and SBI Investment, both subsidiaries of Tokyo-based SBI Holding. The investment cements Quark’s deep relationship with Japan; its previous investors include two other Tokyo-based investment partnerships, the Trans-Science Global Bio-Technology Fund and Asuka DBJ Investment LPS, and the company has long worked with several Japanese pharmaceutical companies as well.

Quark’s work in RNAi — the use of short RNA molecules to “silence” disease-related genes — has already produced two drug candidates that are in clinical trials. One is being tested in the eye condition known as age-related macular degeneration by Pfizer; Quark is testing the other as a way to prevent acute kidney industry.

Danny Zurr, Quark’s CEO, said the startup will use the funding to greatly expand  its clinical-trial program. By the second half of this year, the company plans to have its drug candidates in five different tests at Quark and Pfizer. We’ve written a fair bit about Quark and its colorful history over the past year or so.

TargetRx takes in $9.6M for physician-prescribing data – TargetRx, a Horsham, Pa., startup that analyzes physician-prescribing behavior for drug companies, raised $9.6 million in a new funding round. Its backers include Quaker BioVentures, New Enterprise Associates and Domain Associates.

Target bills itself as a company capable of providing “unparalled insights” into the way doctors prescribe drugs — always a subject of great interest to pharmas of all stripes. In practice, Target appears to get its information by paying doctors to participate in online marketing programs held in a closed forum on its Web site.

The company claims that its methods provide useful predictive information about physician behavior. In certain respects, its approach isn’t all that different from Sermo, which has begun selling access to its online doctor forum to investors and pharmaceutical companies like Pfizer.

Last June, I posted about the long and winding history of Fremont, Calif.-based Quark Pharmaceuticals, a biotech developing drugs based on a new gene-silencing technology called RNA interference, or RNAi. At the time, I labeled the company a biotech chameleon — a term I used to describe biotechs that reinvent themselves, often abruptly and without looking back.

In that sense, Quark is still a chameleon, by which I don’t mean anything pejorative — biotechs turn on a dime all the time, often for very good reasons (failed clinical trials, for instance, being a prime example). Some biotechs, however, reinvent themselves for less admirable ends, such as shifting gears to catch rising investor enthusiasm for a sexy new technology or drug-development strategy. In that earlier post, I raised the possibility that Quark had done exactly that by licensing its experimental RNAi drugs from another company and then rushing to declare itself a pioneer in RNAi therapy.

That part, however, turns out not to be true. I’ll lay out the whole story below the fold for anyone interested, but the short version is that Quark has been ill-served by earlier public statements made by its partner Silence Therapeutics that incorrectly implied that Silence had originally discovered what are now Quark’s leading RNAi drug candidates. These are the statements I alluded to in an earlier post, in which I quoted Quark CEO Danny Zurr saying that Silence had been “deceiving the public” by inaccurately describing the two companies’ relationship.

After looking into the Silence-Quark partnership more deeply, my current understanding is that Quark developed both its leading RNAi candidates with help from Silence, but only licensed certain nucleic-acid chemistry from its partner, not the RNAi molecules (or sequences) themselves. The bottom line is that Quark appears much more justified in its claim to be a leader in RNAi therapeutic development than I originally thought.

Before getting into all that, a quick update on Quark’s recent funding efforts. Gavin Samuels, the company’s VP for business development and investor relations, says Quark has lined up a syndicate of investors who have pledged roughly $20 million of the company’s intended $30 million funding round. The final $10 million may be provided by new investors who join that syndicate, although Samuels said Quark may also simply wait another three months or so to raise those funds. One factor weighing on the company is a pending “milestone” payment Quark is expecting soon from Pfizer, and whether that will be enough to carry the company into mid-2009 without the need to raise another $10 million. (Biotechs love such milestone payments, which are typically “non-dilutive” cash infusions that don’t shrink startup founders’ ownership stakes or require other existing investors to pony up in order to maintain their stake in a company.)

Samuels also told me that Quark’s abortive IPO last year foundered for both internal and external reasons, including market jitters following the huge Blackstone Group IPO last June that hit right as Quark was hoping to price its offering. The company itself, however, wasn’t blameless, he says. For instance, Quark may have jumped the gun by trying to go public when it only had one drug in early-stage human testing; in addition, Samuels says, the startup hadn’t done enough to make its case with journalists and market analysts.

Anyway, on to the convoluted history of Quark and Silence after the jump.

Read the rest of this entry »

Fremont, Calif.-based Quark Pharmaceuticals, a biotech developing drugs based on a new technology called RNA interference, hopes to raise $30 million in an eighth funding round, VentureWire reports. Last year, Quark sought $80.5 million in an ultimately abortive IPO.

Quark apparently hopes to close the round within the next few weeks. The company hasn’t given up hope of going public, and now envisions re-filing its IPO in mid-2009. Quark, a biotech chameleon with a long and convoluted history, has so far raised roughly $72 million, according to VentureWire.

For the record, I should note that Quark CEO Danny Zurr objects to the characterization of his company as a Johnny-come-lately in the field of RNA interference, a clinically unproven way of “silencing” disease-related genes using short, tailored stretches of RNA. I wrote earlier, based on a number of fairly unambiguous press releases, that Quark had licensed its two leading RNAi drug candidates from Silence Therapeutics, then known as SR Pharma. In an interview a few months back, Zurr told me that Silence had been “deceiving the public” with its public statements, and that Quark had targeted the two genes in question on its own.

I didn’t write about my discussion with Zurr at the time because I wanted to explore the background further, something I obviously haven’t yet done. But with a new funding looming, I’ll do my best to get to the bottom of all this with Silence shortly.

Read the rest of this entry »

Quark Pharmaceuticals, the biotech chameleon I profiled here, delayed an IPO that the company expects to raise as much as $81 million, VentureWire reports (subscription required). The newswire said the Fremont, Calif., developer of RNA-interference drugs was slated to begin trading on the Nasdaq Stock Market today.

It’s hard to know what a postponement like this means, although I can’t help wondering if picky investors who have already turned up their noses at a number of biotech offerings this year are having second thoughts about Quark, which remade itself as an RNAi company on biotech’s cutting edge by acquiring two drug candidates and then renamed itself earlier this month. We’ll see when and if they make it out the IPO gate; watch to see if they come close to their predicted $12 to $14 per-share offering price.

(UPDATED: See below.)

For some reason, biotechnology is rife with chameleons — companies that suddenly and radically alter their scientific strategy, disease focus or business model, sometimes to recover from a major failure, and sometimes just to be whatever faddish investors want them to be.

Today, for instance, Quark Pharmaceuticals — now a Fremont, Calif., developer of drugs that work via a new mechanism known as “RNA interference” — said in an SEC filing that it now hopes to raise as much as $80.5 million in an IPO. (That SEC document is here).

Quark, which is backed by Larry Ellison’s Tako Ventures, describes itself in the filing as a “clinical stage biopharmaceutical company” with an “initial focus” on drugs that work via RNA interference, or RNAi — a Nobel Prize-winning technique for “silencing” particular genes using carefully engineered snippets of RNA. It has two RNAi-based drugs already in human testing — RTP-801i, for a form of blindness called age-related macular degeneration, and AKIi-5, for kidney failure. RNAi drug development is getting a lot of big-money attention these days, as witnessed by Merck’s $1.1 billion acquisition of the RNAi biotech Sirna Therapeutics last year. (Pfizer has signed on to co-develop Quark’s RTP-801i.)

Quark, however, is a relative newcomer to RNAi, although that fact isn’t exactly clear in its filing. It acquired both of its leading drug candidates from Atugen AG, now a unit of Silence Therapeutics (which, confusingly enough, was formerly known as SR Pharma). The name Quark Pharmaceuticals is also new; until this month, the company was known as Quark Biotech, and before that as Expression Systems.

In other words, Quark’s conversion to RNA interference, or RNAi, looks like a classic chameleon move, made possible by its ability to quickly in-license drug candidates based on a hot new technology, thus allowing it to tout itself to investors as a cutting-edge biotech.

Based on what I know at the moment, I can’t say one way or another if Quark’s RNAi work is truly cutting-edge. I do, however, know that the company has an interesting and unusual pedigree that for most of its history had nothing to do with RNA interference.

Although founded in California in 1994 as Expression Systems — the name presumably refers to gene output, or “expression” — the company has long maintained its principal research facilities in Israel. Over much of its history, in fact, the company has frequently been classified more as an Israeli biotech than an American one. Consider, for instance, its listing on the Israeli Life Science Industry Web page. In addition, Quark’s SEC filing lists among its risk factors the fact that “[w]e have significant operations in Israel, which may be adversely affected by acts of terrorism or major hostilities.”

In 1997, the company renamed itself Quark Biotech and began to focus on genome-based drug development — that is, on identifying genes linked to specific diseases and then finding drugs that turn off those genes or otherwise mitigate their effects. In general, this sort of strategy hasn’t worked out so well, both because most of these disease-gene links have been faulty and because most genes have only a limited impact on disease.

Like other companies at the time — most notably Lexicon Genetics and Deltagen — Quark apparently thought it could identify these genomic drug targets by breeding mice in which important genes had been “knocked out.” A multi-year genomics research collaboration with the Cleveland Clinic Foundation led it to take the unusual step of moving its headquarters to Cleveland in 2001. Just two years later, however, when the company announced that it had created a mouse that totally lacked cholesterol — a discovery momentous enough for Science to publish it — the Cleveland Clinic wasn’t among its collaborators, and the company’s headquarters had moved again to Fremont, Calif.

Quark’s involvement with RNAi seems to date only back to 2004, when it licensed RNAi technology from the Silence Therapeutics unit Atugen. That collaboration pertained specifically to a gene called RTP-801 that appeared to play a major role in inflammation. The next year, the two companies expanded their agreement to cover RNAi drugs for five other undisclosed genes. Silence Therapeutics revealed that AKIi-5 was one of them in this press release:

SR Pharma expects to begin the clinical development of its proprietary AtuRNAi therapeutic molecules for systemic cancer indications in 2007. SR Pharma has sublicensed the AtuRNAi compound RTP-801i to Pfizer through its collaboration partner Quark Biotech Inc. for the treatment of Age-related Macular Degeneration (AMD) and a number of other indications. This compound entered the clinic in early 2007. In addition SR Pharma has licensed a further AtuRNAi compound, AKIi-5, to Quark Biotech Inc. This compound has been granted an IND for acute kidney injury and is expected to enter the clinic in 2007.

That’s just part of Quark’s interesting history. It has long worked with several Japanese pharmaceutical companies, which explains why its second and third-largest shareholders are two Japanese investment partnerships, the Trans-Science Global Bio-Technology Fund and Asuka DBJ Investment LPS. (Ellison’s Tako Ventures is the largest investor, with 42.3% of the company.)

Quark hopes to price up to 5.75 million shares between $12 and $14 apiece, which would make Tako’s 5.6 million shares worth as much as $78.4 million. Overall, the company could have a market capitalization of as much as $256 million following the offering.

Biotech chameleons like Quark are fascinating because of the ease with with they shed their skin and morph into something new, often without ever looking back. Some, of course, do so for perfectly legitimate business reasons, while others seem most eager to catch new trends and to ride them as hard as they can.

It’s often hard to tell which is which, though, which is one reason I hope to occasionally spend some time looking at particular biotech chameleons to see how far their public image diverges from their actual history. After all, there’s nothing wrong with making a fresh start — at least so long as potential investors know exactly what they’re getting into.

UPDATE: Turns out Silence wasn’t such an authoritative source on the details of its partnership with Quark. I revisited the subject and laid out the company’s obfuscatory language and how it Quark’s actual role in developing its RNAi drugs in this post.