The Skinny blog is written by Rick Smith, editor and co-founder of WRAL Tech Wire and business editor of WRAL.com.
RESEARCH TRIANGLE PARK, N.C. – Rex Health Ventures has made its first “play,” a $500,000 investment in Morrisville-based Aerial BioPharma, and a key advisor helped bring the players to the altar of a deal.
The Skinny asked Merrette Moore, a venture capitalist and advisor to Rex Health Ventures, about his matchmaking in the deal that was announced Thursday.
What role did you play in this deal? And why?
Given my relationships with (Aerial president) Steve Butts and (Aerial CEO) Moise Khayrallah, Aerial was an investment opportunity that I knew about before working with Rex, so I guess you could say that I “brought in the deal” by introducing the Aerial team to the Rex Health Ventures team. I also assisted with the due diligence and deal closing processes.
I was involved in the deal because I believed Aerial represented a great investment opportunity for Rex Health Ventures, particularly as RHV’s initial investment.
Given the network and resources at Rex – and the larger UNC Healthcare system of which Rex is a part – I felt this would be a good deal for Aerial as well.
(Note: Rex will make its sleep centers available for trials of Aerial’s sleeping disorder drug candidate.)
Life science/pharma/biotech investments can be a very long and expensive payback – why support this deal?
While drug development investments inherently carry lots of risk, I think Aerial is relatively quite attractive from a risk-reward standpoint.
The Aerial team secured exit deals for their first two startups, Addrenex and Neuronex, within three years of starting those companies, so the team has shown an ability for relatively quick, attractive exits. At the end of the day, we are betting on a team to successfully execute and the Aerial team has shown already it can do just that.
Look at what just happened with Biolex (bankrupt) and Targacept (CEO out, stock falling) – aren’t drug deals risky? What makes this deal different?
Drug deals, per se, are very risky. Aerial is not without risk, of course. The objective in this type of investing is to find deals that have attractive risk-reward characteristics.
Aerial is a very attractive deal on the risk-reward continuum in that it has a great team, a sound strategy, and a compelling business model. We are very fortunate to be the only local investor in this deal and look forward to working with Aerial’s world-class startup team.