Phenomix closes US$40 million series B financing

Phenomix, based in Canberra and San Diego, has closed a US$40 million private placement of its series B preferred stock, with new US investors JPMorgan Partners and Delphi Ventures co-leading the financing.

"We raised more than we intended," said Phenomix CEO and president Laura Shawver. "The B round was actually oversubscribed."

The current round of financing brings the total amount raised since Phenomix' inception to $65.5 million, but Shawver said it was currently a difficult market for financing.

"The market is difficult for those companies that are not in the clinic yet. Typically, what investors are looking for are companies that are in Phase II clinical trials," she said.

"Fortunately, Phenomix has two programs that we could show were heading to the clinic and were we could establish clinical proof of concept in a reasonable time. I think that really allowed us to have the success that we had in the financing and to attract additional top tier investors."

The proceeds from the series B funding will be used "to drive a couple of programs into the clinic," said Shawver.

Phenomix's lead program is for a therapeutic for type II diabetes, which the company hopes to take to the clinic in September. The company's second program is for a rheumatoid arthritis therapeutic, which will enter clinical trials in December in collaboration with another Californian biotech, Plexacon.

"Behind that, we have an assortment of other programs in metabolic and immune," said Shawver.

Some of these stem from Phenomix's forward genetics research program, taking place in Canberra, which has been used to identify more than 30 targets shown to reverse disease in mammalian models.

Last year, Phenomix signed an agreement with Genentech to use its forward genetics approach to identify new gene targets for immunological disorders. Shawver said that this deal made it possible to delay the start of the series B financing from mid-2004 to the end of 2004.

In conjunction with the financing, two new directors will join the Phenomix' board: Srinivas Akkaraju, general partner of JPMorgan Partners, and Deepa Pakianathan, general partner of Delphi Ventures.

New investors in the series B financing of Phenomix are JP Morgan Partners, Delphi Ventures and Baker Brothers Investments. These investors join Phenomix' existing investors: GBS Venture Partners, Alta Partners, Sofinnova Ventures, Bay City Capital, CMEA Ventures and Novartis Bioventure Fund.