In yet another sign that the venture capital dry spell is over and rainmakers have returned to North Carolina, Norak Biosciences has snagged $13 million from six venture funds to ramp up its drug discovery program.
Norak overshot its intended target of $8 million to $12 million in the round, but Vice President Terry Willard says the funding provides the company with enough cash to get into 2003 and sets the stage for future rounds by expanding the circle of investors.
“Part of our thinking in taking more than less was that it was such a grind to get this done,” Willard says, noting the deal was six months in the making. “It was a lousy financing environment, and we didn’t want to have to go back out really soon to get more.”
The money triples the $3.4 million Norak garnered in its first funding round two years ago.
Durham-based Intersouth Partners and Aurora Funds, which both took part in Norak’s first round, were joined this time by Noro-Moseley Partners of Atlanta, which led the latest round, New York-based Mitsui & Co. Venture Partners and two passive investors: Alexandria Real Estate Equities and Koch Enterprises.
New screening technology
Part of the new funding will pay for the purchase of libraries containing 300,000 chemical compounds that Norak can screen for potential drug candidates. The company uses a proprietary screening technology developed at Duke University Medical Center to discover drugs that regulate G protein-coupled receptors.
The so-called GPCRs regulate cell physiology and account for one percent of the human genome. But they are targeted by about half of all drugs currently on the market, including those that battle cardiovascular disease, inflammation and pain, representing about $50 billion in annual sales, according to Willard.
Initial screening of 50,000 compounds that Norak previously purchased has produced some hits, he says: “Now, we’re chasing them down to determine if they’re true hits,” which could make them potential drug candidates.
Norak isn’t far enough along to begin discussing licensing candidates to large pharmaceutical firms, Willard says. But he adds that the company is talking with a few drug giants, which he declined to identify, about licensing its Transfluor screening technology. Striking such deals would produce revenue that would then be plowed back into more drug discovery work, he says.
“It’s a great platform … that will open a large market,” Aurora Funds managing director Jeff Clark says of the Transfluor technology.
Larger space, more employees
Clark also points to several other positives about the deal: The $13 million provides Norak with enough cash to meet milestones and maintain a future reserve; Noro-Moseley adds extensive experience in biotech deals; and Mitsui’s connections in Japan will help open doors to strategic relationships in Asia.
Having Alexandria as an investor also gives Norak the inside track on leasing coveted wet lab space near RTP. The California-based real estate firm specializes in developing commercial lab space and owns a few buildings in the Triangle.
Willard says Norak currently leases about 3,500 square feet in the Becton Dickinson Technologies incubator and is looking to triple its space soon to make room for its growing screening program. The company also will likely double its 14-person payroll within the year, he says.