In 2nd round, biotech startup Allozyne nets $30M

Biotech startup Allozyne raised $30 million from investors in its second round of financing, enough for the company to fund its way through an early-stage clinical trial — and look for its own digs.

The firm is the third biotech spawn to emerge from Accelerator Corp., a Seattle incubator specializing in life-sciences ventures. The two other graduates, VLST and Spaltudaq, raised $55 million and $29 million, respectively.

The financing round was led by MPM Capital, a global life-sciences investment-management firm. Existing investors OVP Venture Partners, Amgen Ventures, ARCH Venture Partners and Alexandria Real Estate Equities, which invested about $6.4 million in a previous round, also participated.

Allozyne's financing puts an end to a relatively dry spell in venture-capital investments in local biotech. A study released last week by Ernst&Young/VentureOne said that the sector saw only about $900,000 in venture money during the third quarter, down from $59 million the previous quarter.

Prospects for further investment in the sector look good, as pharmaceutical firms with diminishing product pipelines have been eager to get into partnerships with biotechs or to buy into them at earlier stages than before.

That provides a lucrative incentive to early investors, said Accelerator Chief Executive Carl Weissman. "In general, biotech venture capital is upticking," he said.

Preparing for growth

Allozyne hopes to tap into a $4 billion market for interferon beta to fight multiple sclerosis by creating an improved version of the protein that would be administered less frequently.

Its new treasure chest will take the company through preclinical development and early clinical testing of its multiple-sclerosis therapy candidate, said Chief Executive Meenu Chhabra.

Early-stage trials, also known as Phase I, could conclude by 2010. At that time, the company could be ripe for a profitable partnership with Big Pharma, she said.

Funds will also go toward improving the company's technology and developing a second product candidate, a diabetes therapy.

In the meantime, the company — now at Accelerator's Eastlake headquarters — also will find a home of its own.

"In a few months we'll have our own stand-alone facility," Chhabra said, adding that Allozyine would probably double its 10-person payroll by the end of next year.

Chhabra, a former Geneva-based executive at Novartis Consumer Health, recently joined Allozyne to guide the company through its initial spurt of growth. She served as chief business officer of BioXell, a Milan-based biotech firm.

The company relies on technology developed at the California Institute of Technology, and was first led by Kenneth Grabstein, a former director of immunology at Immunex and a co-founder of Corixa. Grabstein continues as Allozyne's chief scientific officer.

Allozyne was founded by three Cal Tech researchers, David Tirrell, William Goddard and Deepshikha Datta, who are involved in the board and the scientific advisory panel.

Ángel González: 206-515-5644 or agonzalez@seattletimes.com