Kineta, Scouring the World for Cash, Finds Oil Money

5/21/13Follow @xconomy

Seattle-based Kineta has found some more support for its drug development work from an unlikely source—a group of oil traders.

The company said today it has raised an undisclosed amount of cash from Hydra, a group made up of 13 recently retired oil traders with Glencore Ltd. Although the amount is secret, Kineta now says it has secured a total of $46 million in R&D support through government grants, contracts, and investment capital since its inception in December 2007. When I reported on Kineta last June, the company said it had $38 million in total support, and that tally climbed some more in February when the company announced an investment from RLB Holdings.

Oil traders are best known for making quick moves to buy and sell commodities that can generate fast profits—not for making the kind of long-term bets typically associated with biopharmaceutical R&D. Hydra, led by Jamie Browne and Ken Backes, is making its first biotech investment, said Dan Eramian, a spokesman for Kineta. The traders were enticed to invest not in Kineta as a company, but in two of its specific drug programs—one called Shk-186 for autoimmune disease, and an antiviral drug called rOAS.

Kineta, as I’ve described in the past, has an unusual model in which it hopes to generate relatively fast returns for investors. It’s supposed to work by taking a small amount of money to conduct early-stage clinical trials of a drug, and then generate liquid returns when a bigger drugmaker pays to license the drug for late-stage development. Kineta has said its goal is to make that handoff to a bigger company after about three years of development work. Kineta has said previously it has attracted investment from the Iacocca Family Foundation, MPI Research, and a network of about 30 pharmaceutical industry executives.

Kineta's founders. Shawn Iadonato (left) and Chuck Magness (right)

Even though the company has consistently been able to raise cash for its programs, it hasn’t yet reported on a big collaboration to reward its early investors.

“We are genuinely impressed with Kineta’s leadership and laser-focus on delivering high caliber R&D to larger global pharmaceutical companies. This is a nimble organization with a track record of development success. Kineta has created a unique, cost efficient and rational way to move early stage drug programs into human subjects with a focus on rapidly delivering liquidity. All of these factors went into our investment decision,” said Jamie Browne, a managing director of Hydra, in a Kineta statement.

One of Kineta’s drug candidates that’s part of this investment, Shk-186, has completed the first phase of clinical trials and is being prepped for the next step in clinical trials, the company said. The other, rOAS, is being readied for its first clinical trial later this year.

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