Proteon Therapeutics Extends Cash Runway With Series B Bump

Dow Jones VentureWire

Proteon Therapeutics Extends Cash Runway With Series B Bump

By Lorie Konish

Biopharmaceutical company Proteon Therapeutics Inc., which in March simultaneously raised a Series B round and formed a deal with Novartis AG for the potential sale of the company, has extended that round to $50 million.

Two new investors joined the previous Series B syndicate in the $12 million second tranche: Bessemer Venture Partners and Devon Park Bioventures. The company was about 98% certain of the new investors’ decision to invest at the time of the $38 million first close, said Proteon President and Chief Executive Timothy P. Noyes, because they had already completed due diligence. The $12 million second tranche closed in mid-April at the same undisclosed valuation as the previous Series B funding.

“Given that we essentially simultaneously did the Novartis deal and the Series B with new investors, it just became a logistics challenge to get all the investors together for the Series B,” Noyes said of the first close.

The extension reaches the company’s fund-raising goal of $50 million for the round, Noyes said, and brings its total equity funding to $81 million, not including the Novartis deal.

The new funding extends the company’s cash runway to four years, or until 2013, Noyes said. It also positions the company with enough cash to ensure current investors’ stakes will not be diluted before the potential company sale, while also giving the company a cushion should the deal not go through.

“I don’t think you can be over-financed in this environment,” Noyes said. “The flip side of trying to make sure the company has deep pockets is to make sure if, for whatever reason, Novartis passes and the data are good, it would give us enough money to continue to run the company.”

Proteon’s option deal with Novartis follows a recent industry trend as companies increasingly turn to larger companies for funding, while bringing those companies new possibilities to fill their pipelines with fresh products. Novartis has also formed deals with Elixir Pharmaceuticals Inc., also for an acquisition option, and Peptimmune Inc., including worldwide rights to its lead multiple sclerosis drug.

Proteon’s March agreement with Novartis gave Novartis the exclusive option to acquire Proteon following the completion of a Phase II study for its lead candidate, PRT-201, with possible secondary rights for a global license. That candidate has received Orphan Drug Designation from the Food and Drug Administration for the prevention of arteriovenous fistula maturation failure and arteriovenous graft failure for patients with end-stage renal disease undergoing hemodialysis.

Proteon has initiated a Phase I/II clinical trail for PRT-201 in patients with end-stage renal disease who are undergoing surgery for arteriovenous fistula creation. Phase I results for that trial are scheduled for next year, with Phase II results slated for 2012. The company also plans to file an Investigative New Drug Application supplement this year for the use of PRT-201 to treat arterial venous graft.

While the majority of the new $12 million tranche came from Bessemer and Devon Park, the rest of the Series B syndicate also participated, Noyes said. Previous Series B investors include Intersouth Partners, MPM Capital on behalf of the MPM Bio IV NVS Strategic Fund LP, Prism VentureWorks, Skyline Ventures, TVM Capital and Vectis Healthcare & Life Sciences Fund. Other investors in the round included undisclosed individuals and small investment firms.

Neither Bessemer nor Devon Park returned calls for comment by press time.