Proteon Fills Coffers with $38M Round, Inks Deal for Potential Sale to Novartis

3/5/09

Proteon Therapeutics says it has closed a $38 million Series B round of financing to fund development of its drug for kidney disease patients on chronic dialysis—and the Waltham, MA-based company has struck a separate deal that gives Swiss drug giant Novartis an option to buy the firm if the drug, the lead treatment in Proteon’s pipeline, succeeds in mid-stage clinical trials.

Boston-based venture firm MPM Capital led the round of financing, which included investments by Vectis Healthcare & Life Sciences Fund and previous backers TVM Capital, Skyline Ventures, Prism VentureWorks, Intersouth Partners, as well as earlier angel investors. The cash infusion follows Proteon’s launch of an early-stage clinical trial of its lead drug, PRT-201, an engineered version of the human protein elastase that is intended to improve the outcome of a surgery that prepares a patient’s blood vessel to be frequently hooked up to a hemodialysis machine. Failure of this procedure, called arteriovenous fistula surgery, is a common problem for patients on long-term dialysis.

“Patients with kidney failure endure great suffering and frequent hospitalization due to vascular access complications,” says Proteon CEO Timothy Noyes, in a statement. “If successful, PRT-201 may improve medical outcomes and lower the associated cost of care.”

If the treatment succeeds in a later mid-stage clinical trial, Novartis has the option to buy Proteon outright or to license the firm’s lead product candidate. Proteon says that the potential buyout deal with Novartis would be worth $550 million, which includes the initial acquisition payment and future milestones. The startup didn’t provide details on how much it would receive upfront verses down the road if the drug achieves development goals.

Noyes is no stranger to large companies buying out smaller biotech firms. He was part of the executive team at former Waltham biotech firm GelTex Pharmaceuticals, which Cambridge, MA-based biotech Genzyme (NASDAQ:GENZ) acquired for more than $1 billion in 2000. Noyes took the reins at Proteon in 2006, and he later moved the company’s headquarters from Kansas City, MO, to Massachusetts. The firm still operates research labs in Kansas City.

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