$19 million for biotech startup PhaseRx

Venture capitalists have agreed to nurture PhaseRx, a nascent Seattle biotech, with funding of up to $19 million to pursue a pioneering technique that could help turn off harmful genes.

The financing, led by ARCH Venture Partners, 5AM Ventures and Versant Ventures, starts with a $4 million upfront investment.

The remainder will be available upon hitting some research milestones, such as putting the theory behind its technology into practice, and reaching certain business objectives the firm declined to disclose.

The rest of the investment could come in the next 24 months, said founder Bob Overell.

PhaseRx seeks to develop a way to deliver therapies based on siRNA, or small interfering RNA, a technique that allows genes linked to maladies to be switched off.

That research field is one of the hottest in the biotechnology sector, said David Miller, an analyst with Biotech Stock Research. In late 2006, pharma giant Merck paid $1.1 billion for Sirna Therapeutics, triggering a "land rush" on small private companies working in the field, Miller said. Interest in this new field is "huge," he said.

Another local biotech, Nastech Pharmaceutical, aims to spin off its RNA interference research program into a separate firm. One of its former executives, Paul Johnson, is the founding chief scientific officer of PhaseRx.

PhaseRx was put together by Overell, a former Frazier Healthcare Ventures partner who now heads Foundation BioVentures in Seattle. Other founders include University of Washington researchers Patrick Stayton and Allan Hoffman, and Oliver Press of the Fred Hutchinson Cancer Research Center.

Despite the RNA interference hype, the technology has a long way to go, said Miller. "Nobody has figured out how to deliver an RNA-based drug in humans yet."

But PhaseRx founders are optimistic. They said in a statement that the polymer technology the company licensed from Stayton and Hoffman's laboratories at the UW "enables the effective delivery" of interfering RNA and other therapies into living animals.

This is the second local budding biotech recently funded by ARCH Ventures. The firm in November led a $12 million financing round for Fate Therapeutics, which seeks to develop stem-cell based therapies.

ARCH managing director Steven Gillis, a co-founder of Immunex and Corixa, will become PhaseRx's chairman.

Ángel González: 206-515-5644