A local biotechnology company has attracted $4 million in venture capital funds that both the venture capitalists and the company hope will help Spherics become a major – and profitable – player in developing methods to deliver drugs that result in fewer side effects. The investment is significant on several fronts.
This is a company that was started in 1997 with $200,000 in grants and loans from the state’s Center for Cellular Medicine, demonstrating how those grants can multiply, create jobs and potential opportunity.
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Also, Rhode Island companies have traditionally failed to attract considerable venture capital investment, noted often by economists as among the causes for Rhode Island’s lackluster economic growth, even in a burgeoning economy.
And, it is another signal that the bio-technology industry, in spite of Alpha Beta’s demise and CytoTherapeutics move west, remains a potentially vital industry in Rhode Island.
The venture capital investment in Spherics comes at virtually the same time that tradesafe.com, a Providence based company, received $10 million from IQ Capital, a German venture capital firm. Tradesafe.com is an online payment processor for party-to-party transactions on the Web.
Spherics received $3.25 million from Zero Stage Capital and $750,000 from CB Health Ventures of Boston. This is the second Rhode Island venture funding that Zero Stage has become involved in since January, and the third in a year.
Zero Stage Capital, a Cambridge based firm, has an office in Rhode Island.
In January, Zero Stage invested $3.6 million in BlueStreak.com, a Newport Internet marketing company, and last May invested $900,000 in a Newport based company, the name and mission of which have not be disclosed by either Zero Stage or the company.
For Mark Thaller, who runs Zero Stage’s Rhode Island office, the investment in Spherics holds considerable promise because, he said, it will provide pharmaceutical companies with another method of delivery for drugs coming off patent, thereby allowing the companies to extend the drugs’ patent life. Once a drug comes off patent, it is subject to replication by other companies, creating the so-called generic varieties.
”What happens if we make things available reformulated with the Spherics’ technology? We’ve got another 17 years,” said Thaller, who now holds a seat on the Spherics board of directors.
The medical reality, said Dr. Ben Bornstein, consultant chief executive officer and president of the company, is that Spherics is attempting to develop a drug delivery that will improve the gastrointestinal uptake (absorption) of existing, poorly absorbed oral medications and allow oral administration of drugs now taken by injection.
With current delivery systems, Bornstein said, the drugs are simply not “well absorbed from the bowel,” resulting in the need for strong dosages, the need to take the drugs more frequently, and erratic results. All of that, he suggests, leads to “lack of efficacy” and “side effects,” both of which may cause the patient to skip taking the pills to avoid problems.
”What we’re looking to do is improve absorption of drugs, make them more consistent, less erratic,” Bornstein said. “Our hope is the drug can be given less frequently, (require) fewer pills, and improve patient compliance.”
He suggested, for instance, the patient that becomes lax in taking blood pressure pills risks suffering a stroke or heart attack.
Spherics, which was founded by Edith Mathiowitz, Ph.D., a Brown University professor, currently has one employee, Bornstein said, a scientist. With the new round of funding, the company will quickly expand to four scientists, and last week signed a lease for a 5,700 square foot facility at 300 Metro Boulevard in Warwick, which Bornstein expects it to occupy later this week. By the end of the year, Bornstein said, he expects the company to have 10 employees.
Besides the venture capital funding, Bornstein said, the company has partnered with Ares Serono, a Swiss based pharmaceutical company with a number of products. Bornstein declined to disclose the products, but said Spherics and Ares were involved in a “research and development collaboration.”
Additionally, Bornstein said, the company’s technology is exclusively licensed from the Brown University Research Foundation.
Bornstein described the company as being “early” in its research stage, but does have the results of “animal studies.” He said the first tests on humans could come in 18 months.
tradesafe.com
Tradesafe.com announced its venture capital funding at presstime, along with the development of a strategic partnership with Fleet Bank, a number of Internet sites and e-commerce technology providers.
Tradesafe.com says it “rapidly executes secure online credit card transactions – paying sellers immediately – without participants having to establish merchant accounts.”
The company suggests its “secure processing service” is useful for Internet auctions, shopping and other e-commerce sites that do not have their own credit card systems in place.
