UW biotech startup wins financing from Accelerator

The Accelerator has placed bets for three years on raw biotech ideas with potential — concepts that need a couple years of seasoning before they are ready for big-time venture capital, if ever.

Now the Seattle-based incubator with ties to biotech pioneer Leroy Hood has made its initial fund's sixth and final bet in a new company, a University of Washington spinoff called Seredigm.

The latest company is built on discoveries by UW hematologist John Harlan and biophysicist Robert Winn. They are testing a family of protein drugs they hope will protect the heart and other tissues from the damage caused when blood flow and oxygen are cut off because of a heart attack, stroke, trauma or some other reaction.

The problem, called ischemia-reperfusion, is enormous and has stumped researchers for decades. The damage from interrupted blood flow is compounded when the flow is restored, and the body mounts a massive inflammatory assault on the area around the injured tissue.

Harlan and Winn, who have collaborated since 1980, will keep their day jobs at Harborview Medical Center, which is affiliated with the UW, and serve as consultants, with founding equity stakes, in Seredigm.

The UW is getting founding shares in Seredigm, and will be entitled to any future milestone payments in cash, shares and royalties on product sales. Michael Gallatin, a venture partner with Frazier Healthcare Ventures and a former chief scientific officer at Icos, will serve as an adviser.

Accelerator

Founded: 2003

Located: Seattle, 1616 Eastlake Ave. E.

President and CEO: Carl Weissman

Who's involved: The investors are Arch Venture Partners, MPM Capital, Versant Ventures, OVP Venture Partners and Amgen Ventures. Alexandria Real Estate Equities provides lab and office space. The Institute for Systems Biology, led by Leroy Hood, offers companies access to its labs and faculty in exchange for an ownership stake.

Business plan: About $4.2 million was invested in labs and offices for biotech startups, with $21.8 million to invest in individual companies. The plan was to invest in six to eight companies and launch at least two successful startups.

Portfolio companies (date founded): VieVax (May 2004, now shut down), VLST (May 2004, raised $55 million last month), Spaltudaq (January 2005), Homestead Clinical (July 2005), Allozyne (November 2005), Seredigm (July 2006)

Next goal: Weissman is gauging interest among investors for a second Accelerator fund.

Source: Accelerator

Numerous high-tech approaches to ischemia-reperfusion — targeted antibody drugs, gene therapies, chemical drugs — have failed.

Seredigm's founders are tight-lipped about their work so far — it hasn't been published yet — and they won't identify the protein family they are using. They said they have already shown in mice and rats that they can significantly protect tissue from inflammatory damage.

Harlan hinted that their proteins have been studied extensively inside cells as targets for drugs, but he said they are using the opposite approach, to inject the protein as a drug so it can trigger helpful reactions outside the cell.

Harlan and Winn acknowledge some peers are skeptical about their approach. They will be financed for two years toward their goal of starting clinical trials, the ultimate proving ground for a new therapy.

Tough challenge

Nigel Mackman, a vascular biology expert at The Scripps Research Institute in La Jolla, Calif., said the field has had trouble moving beyond success with small animals into success with people, because the experiments are better controlled than what happens in real life after a patient suffers a heart attack or stroke. It is also difficult to measure meaningful improvement in people, he said.

Luis Melo, an ischemia-reperfusion researcher at Queen's University in Kingston, Ontario, said the inflammatory reaction has many different components, while drug development typically focuses on just one part of the problem. "There is no one silver bullet," Melo said.

Seredigm's investors say they aren't deterred. Jay Hagen, managing director of Amgen Ventures, said his parent company has avoided the field because of the history of failure. But he was intrigued by Seredigm, partly because it is novel and for the potential to treat large numbers of people.

Brian Atwood, managing director of Versant Ventures, said he likes how the founders have learned from past mistakes. "If this works, it will be a big, big deal," he said.

It's too early to say what Accelerator's success rate might be. Of the first two companies founded in 2004, VieVax and VLST, the first has been shut down and the second "graduated" from the incubator with a $55 million financing in hand.

Carl Weissman, president of Accelerator, who handles business for all the startups, said the four newer companies are all hitting their interim milestones and appear poised to reach their goal of securing additional financing to continue.

If that happens — and Hagen and Atwood said they think it will — then Accelerator will see five of its original six companies advance. The original plan counted on just two of the six advancing.

Weissman said he is gauging interest among investors into doing a second Accelerator, with another $20 million to $25 million commitment.

Since Accelerator was started three years ago, there was a shake-up at one of its investors, MPM Capital, which caused a key partner to leave. Weissman said some of the other investors have raised new funds, and may be looking at other opportunities, with bigger money at stake. Much will depend on whether the investors think they can entice other investors to buy into Accelerator's spinoffs.

Money for investors

If the Accelerator offspring continue to progress, Weissman said it will be because of the organization's focus on making money for investors.

Incubators have a bad name because they are often done by real-estate developers who care most about filling up lab space, or by local government agencies that want to say they have created jobs for political purposes, he said.

"What's different here is there is no occupancy pressure, and there is no agenda to build biotech in Seattle. I care not one bit about either of those things," Weissman said.

"My sole responsibility is to select companies that provide the best possible return to my investors. They have a single-minded goal. There is not another entity like it in biotechnology. I think that's why it is working."

Luke Timmerman: 206-515-5644 or ltimmerman@seattletimes.com