Pennsylvania's Merganser Biotech raised a $28 million A round with the help of Novartis ($NVS) Venture Fund, paying the company's way as it homes in on iron-related diseases.
The company is at work on peptides that mimic hepcidin, a hormone produced by the liver that controls iron levels in the blood. The body uses hepcidin as a regulatory protein, dialing down production when it needs iron to stop a hemorrhage and then turning it back up to avoid a toxic response. Merganser's candidates, by replicating the effects of hepcidin, promise to treat rare hematological disorders that result in dangerous iron overload, including hemochromatosis, beta thalassemia and myelodysplastic syndrome.
The technology, developed at UCLA, allows Merganser to replicate hepcidin in its smallest possible form, creating drug-like peptides that can be modified to maximize their therapeutic effects. Now the biotech is focused on determining which of its candidates to push into human trials this year, eventually picking a first disease target, CEO Brian MacDonald said.
And now it has $28 million to get there, raising funds MacDonald said will get the company to the proof-of-concept stage with its lead asset. Novartis led the Series A, joined by Frazier Healthcare, Sutter Hill Ventures and Osage University Partners, plus founding backers BioAdvance and Stateside Developments.
Despite the recent boom in biotech valuations, it's never easy to raise money as a seedling company with no clinical data, MacDonald said. But getting an early signature from the Novartis Venture Fund made the Merganser story more convincing to other investors, he said, and the group's clout is no coincidence.
"Having been through the due diligence process with Novartis, I can tell that if you get to the other end, you have proven your merit," MacDonald said. "It's not something that I felt was a rubber stamp by any means."
And, unlike many recently funded biotechs, Merganser isn't looking to build out a platform, he said, restraining its focus to the potential of hepcidin mimetics and keeping its head down until it can achieve proof of concept.
In connection with the financing, Novartis Venture Fund's Markus Goebel is taking a seat on Merganser's board, joined by Frazier's James Topper and Sutter Hill's Jeffrey Bird.
- here's the announcement