Accelerator Scores New Investment From PPD, Adds Clinical Trial Expertise

11/14/08Follow @xconomy

Accelerator has lured another high-profile investor into the fold. The Seattle-based biotech startup incubator has collected about $4.5 million from PPD, the global contract research organization that runs clinical trials and animal tests for pharmaceutical companies.

PPD’s founder and CEO, Fred Eshelman, will join the Accelerator board of directors as part of the deal. The investment gives Acclerator a total of $27 million in its third fund, which initially closed in August 2007. The investor group includes Amgen Ventures, Arch Venture Partners, OVP Venture Partners, Alexandria Real Estate Equities, WRF Capital, as well as PPD. By adding the new injection of capital, Accelerator will have cash to invest in one or maybe two more companies, and another year of fuel before it raises a fourth fund in 2010 or 2011, says president Carl Weissman.

Landing PPD as part of the investor syndicate is a score for Accelerator, because the new investor is one of the biggest success stories in pharmaceuticals that few people have ever heard of. This Wilmington, NC-based company (NASDAQ: PPDI), founded by Eshelman in 1985, has capitalized on two powerful forces in the pharmaceutical business—the growth in clinical trials, and the outsourcing of this complex work over the past 20 years. It has more than 10,000 employees in 33 countries, and a market value of $2.7 billion. It ranks among the big three contract research organizations in the U.S. with Covance and Quintiles.

For Accelerator, the outfit adds a missing element of expertise by helping carry promising ideas from the lab bench into well-executed human and animal trials, Weissman says. For PPD, this will let it put its finger on the pulse of some of the hottest technologies in biotech, and possibly get in on the ground floor by providing contract services as the technologies grow up.

“Expertise like theirs is tough to come by, even if you have the money,” says David Schubert, Accelerator’s chief business officer. “We can now tap that infrastructure early on, and we can do it at the highest level of the organization.”

Accelerator wasn’t out shaking the bushes for cash when this opportunity presented itself, Schubert says. He met Nancy Zeleniak, PPD’s global head of venture relations, last year at Invest Northwest, the Washington Biotechnology & Biomedical Association’s annual investor conference. “We got to talking, and we spoke each other’s language,” Schubert says.

Since its founding in 2003, Accelerator has drawn attention for nurturing nine early-stage biotech companies that countered the prevailing trend of venture capitalists betting on late-stage product candidates. Three of the companies—VLST, Spaltudaq, and Allozyne—have gone on to raise a combined $114 million in subsequent venture rounds to build them up into bigger companies.

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