An Alabama company that recently set up shop in North Carolina in part to make itself more attractive to investors has landed $1.3 million in second-round funding.

Research Triangle Ventures of Raleigh was among the firms to put money into Tranzyme, which uses a method for transplanting genes that was developed at the University of Alabama at Birmingham.

Other investors include Birmingham-based Paradigm Venture Partners and Greer & Associates and Pacific Rim Ventures of Hong Kong.

Tranzyme Chief Executive Vipin Garg says the funding is an interim closing on the round, and he has started meeting with other potential investors in hopes of pushing the total up toward $10 million.

“This allows us to expand out program, and hire extra people in the RTP area,” says Garg, who previously was an executive with Apex Bioscience.

Tranzyme moved into space at the BD Technologies incubator in RTP in September as part of a partnership agreement the company signed with BD, a biotechnology research division of New Jersey-based medical products manufacturer Becton Dickinson. About half of Tranzyme’s 15 employees are now based in the Triangle, with the other half in Birmingham.

Garg says the move helps on several fronts: Tranzyme can access the Triangle’s biotech resources and trained work force, can get in front of investors more easily and can tap other pharmaceutical and biotech companies as potential partners.

Partnerships beneficial

Unlike most early-stage biotech companies, Tranzyme has a revenue stream by licensing its technology to partners, which also include Targacept of Winston-Salem and Duke University. Garg says the company had $1.8 million in revenue, which puts its annual burn rate at less than $500,000.

“The revenue gives us a base line,” he says. “We’re not under as much pressure as the typical biotech company, but we need money to expand our business model.”

Tranzyme’s technology allows specific genes to be extracted from the human genome and placed into cells in cultures, explanted organs or specific organs in whole animals. The transfer allows for the development of new cell lines, complex bioassays and genetically modified lab animals.

The company is working with partners on treatments for diseases like cystic fibrosis, Alzheimer’s and stroke. Garg says the company likes to keep about a dozen partnerships going at any one time, and as it grows, it is looking toward more long-term research collaborations than the limited agreements it previously entered to validate its technology.

“Building functional biology is critical to the future of drug discovery,” he says. “Just having a huge genome database is not going to get you to the lead compounds.”

In addition to licensing its technology, Tranzyme is using it to build its own drug pipeline, focusing on neurosensory diseases, such as glaucoma, tinnitus and vertigo. The company chose the niche because other technologies have been unable to modify the neuronal cells associated with such diseases, and 13 targets have already been identified through partnerships that can be exploited for potential drugs, Garg says.

“The beauty of our model is that we help each other,” he says. “Our partners advance in their internal applications, and we gain targets that we can use in our neurosensory work.”