An OVP IPO is Brewing, Allozyne Doing Fine, VLST Finds Second Partner, & More Tidbits from the OVP Tech Summit

5/4/10Follow @xconomy

There was a lot of big picture talk about the future of IT, biotech, and cleantech today at the OVP Tech Summit in downtown Seattle, but I also picked up quite a few morsels of news on the portfolio companies from the venerable Kirkland, WA-based venture firm.

Here are the highlights, which largely came from a quick slide shown by managing director Gerry Langeler, and which I attempted to flesh out further with other partners afterwards.

—One company in the OVP portfolio has selected investment bankers, and is now going to work on drafting an S-1 filing, its initial offering prospectus with the Securities & Exchange Commission. Langeler wouldn’t disclose the company’s name because there were members of the press in the audience, and he didn’t want to run afoul of the SEC’s “quiet period” rules which prohibit officers and directors from marketing a new stock publicly while it’s in the registration phase. This is the first potential IPO for the OVP portfolio in a long time, Langeler joked.

“For a while we thought of investment bankers like unicorns, sort of like cute mythical beasts. But they are back,” Langeler said.

—Seattle-based Allozyne’s clinical trials are going well, Langeler said, without being more specific. This is a company I profiled in October 2008, which is developing a multiple sclerosis drug candidate that is supposed to work better, last longer, have fewer side effects, and require less-frequent injections than the current standard of care. The company, which was founded at Accelerator with computer modeling technology from Caltech, started its first clinical trial about nine months ago.

Gerry Langeler

Gerry Langeler

But since then, CEO Meenu Chhabra has gone radio silent about the drug’s prospects. This is a hotly competitive field, as Cambridge, MA-based Biogen Idec is testing a longer-lasting interferon drug for MS in late-stage clinical trials, and another venture-backed startup from San Diego, Ambrx, is also in pursuit of a longer-lasting MS drug.

Chhabra has taken the company into stealth mode, pulling all the information off the company’s website, which has prompted some people to speculate, wrongly, that the company is going out of business, says OVP managing director Carl Weissman. “Allozyne is extremely healthy,” Weissman says. “We are as bullish now as we have ever been.”

—VLST, another graduate of Seattle’s Accelerator, has signed a new partnership, Langeler said in his prepared remarks to the Tech Summit audience. He didn’t name the new partner, and Weissman wouldn’t disclose it either when I approached him later. VLST struck a big deal with Denmark-based Novo Nordisk in December 2008, to help the world’s largest maker of diabetes drugs branch into the wider, and potentially more lucrative world of autoimmune drug discovery.

VLST CEO Martin Simonetti confirmed later that his company received a milestone payment from Novo Nordisk in the first quarter for transferring a drug candidate over to its partner. VLST also struck a second partnership with a large pharmaceutical company, which brought in an undisclosed milestone payment, and provided salaries for three VLST staffers for a year, with an option to extend to a second year, Simonetti says.

Separately, VLST agreed to pay an undisclosed fee and certain milestone payments to San Diego-based AnaptysBio to use that company’s technology to quickly identify potent antibodies to hit new targets that VLST’s scientists have found for autoimmune diseases. That technology will be used to develop antibodies against a target that VLST is developing drugs for on its own.

“The guys on the science side at VLST have been producing at a very high level,” Simonetti says. “We expanded an existing relationship with our partner, we formed a new partnership, and we advanced our own internal program. So it was a good quarter. We’re moving forward.”

—Mirina and Xori, a couple younger generation companies currently being hatched at Accelerator, are both doing well, Langeler says. Mirina, the developer of microRNA based therapies, received a $3.9 million “expansion round” of financing recently to give it another 12 to 15 months to reach a new set of milestones. Xori, which was founded on technology from the University of Washington lab of Nancy Maizels, has shown in the petri dish that it can develop three different antibodies that are extremely potent to specific targets, Weissman says. This is the company that’s using a new technology platform, in chicken cells, that is supposed to be a faster and cheaper way to develop new antibodies than the traditional mammalian cells.

“They did this work with four people in less than a year,” Weissman says. “It’s very exciting.”

—And NanoString Technologies, the Seattle-based maker of genetic analysis instruments, has seen its revenue increase four-fold, Langeler said. NanoString doesn’t disclose its actual sales figures, although director Chad Waite said later that the four-fold sales increase is built on a very small original base of sales. The company isn’t yet profitable, and it’s not likely to see four-fold growth continue from its second to its third year on the market, Waite says. But the customer reviews, from places like the Broad Institute of MIT and Harvard in Cambridge, MA are positive, and the company is on track to hit its planned sales goals for both 2009 and 2010, Waite says.

NanoString is in the midst of a CEO search, and Waite wouldn’t say when the company will be ready to introduce who that will be. I spoke with new executive chairman Bill Young about why he decided to get involved with this company a while back.

How all this progress adds up on OVP’s financial ledger is something that wasn’t released while the press was in the room. But Langeler said the firm’s sixth fund, begun in 2001, will be a “good fund” in a pretty miserable period for the venture industry. The seventh fund, has had “a remarkably low infant mortality rate,” and has potential to start generating liquid cash returns in 2011 or 2012, Langeler said.

“We’ve been through the wars in our 27th year,” Langeler said. “We’ve seen two booms and two busts. Now we’re ready for the third boom.”

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  • Krassen Dimitrov

    Luke,
    It looks like Langeler was BS-ing you about the IPO. Generally, the quiet period starts only AFTER S-1 is filed; it’s been more than two months now and there has been no news of an OVP-backed S-1. It seems to me that the reason he would not provide details is not because of some imaginary quiet period, but because there was no such IPO in the works.

    It has become apparent to everyone by now that Langeler often talks out of his rear end. See for example how Bloomberg debunked his spacious argument for the VC tax-break:
    http://bit.ly/9nqaDF

    Not to mention his hype-ing of the physically impossible m2E-Power, which I debunked in 2008. My advice is: just take everything he says with a grain of salt…