Boston Business Journal:
From the March 11, 2005 print edition
New CEO, VC round give AdipoGenix second chance
Not too long ago, AdipoGenix was about ready to shut its doors. Today, the Boston company is armed with a new CEO, millions of dollars in new venture investment and a renewed push to get its obesity treatments to market.
"It really is an overlooked gem," president and CEO Ed Cannon said of the company and its prospects. "Maybe it's a little dusty, but I think it is a very unusual opportunity."
Cannon became AdipoGenix CEO in December. He leads a company that peaked with 16 employees, but now has about six.
The enterprise, founded in 1997, has raised about $6 million in a first round of venture capital that could reach $14 million when the round is completed by this June. At that point, the company will resume hiring, push to get its lead compounds into clinical trials and form additional pharmaceutical partnerships, Cannon said.
"We have a Johnson & Johnson partnership, and it's been very successful," he said. "So we think with that track record, we can engage another partner."
Cannon said the company went for years with little capital, raising about $5 million through research grants and its J & J partnership, which helped fund pre-clinical research. But AdipoGenix was almost out of cash by 2004, after unsuccessful attempts to raise equity financing and burning more cash than was coming in from existing grants.
Enter MDS Capital in Cambridge and the Boston University Technology Fund, which contributed to a $1 million round of seed funding about two years ago. They approached Cannon, the former CEO of Elixir Pharmaceuticals Inc. in Cambridge, and asked him to look at the company. All parties contemplated closing up shop, but after doing some research they decided to keep going.
"I thought that with higher levels of funding, the company could make significant levels of progress," said Terry Brennan, who runs the Technology Development Fund at BU (formerly the Community Technology Fund) and has committed $750,000 to the new round.
Gerry Brunk, a venture partner with the MDS Capital office in Cambridge, which has committed $5 million in the new round, said he views AdipoGenix's rough patch as "a natural transition" from a seed-stage company to one that becomes serious about developing commercially viable products.
AdipoGenix's technology targets obesity with compounds that would reduce the fat content in fat cells themselves.
Judy Hanover, a research analyst with Life Science Insights in Framingham, said AdipoGenix is charting unique territory and could reach blockbuster status with its drugs, if it can eliminate the side effects and poor health consequences that often plague anti-obesity drugs.
"A third of U.S. adults are obese," she said. "But it would have to be something that's really safe and effective to get on the market."
Mark Hollmer can be reached at email@example.com.
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