Colorado bio firm lands $40 million investment

A Boulder-based developer of drugs for cancer patients landed $40 million in private funding Wednesday, one of the biggest venture capital investments in Colorado this year. Pharmion to use capital to develop cancer drugs

By Greg Griffin
Denver Post Business Writer

Pharmion Corp., which has raised $130 million since its founding in January 2000, will use the money to further develop its pharmaceutical products and possibly acquire others, chief executive Patrick Mahaffy said.

Venture funding has been hard to come by this year, with total investments in Colorado firms falling 58 percent during the first quarter and 66 percent during the second.

One of the few bright spots, however, is the biotech industry, which pulled in 30 percent of all venture capital nationwide during the second quarter, according to the National Venture Capital Association.

"I guess we’re one of the lucky ones," Mahaffy said.

PricewaterhouseCoopers, which conducts a venture capital survey each quarter, will not release third-quarter results for about another week. Daryl Overholt, a senior manager with the firm’s Denver office, said it is not clear yet whether biotech firms fared well during the quarter or whether any deals surpassed Pharmion’s.

The biggest Colorado venture capital investment so far this year was a $107.5 million private placement in the Bill Barrett Corp., an oil company, during the first quarter. Inflow Inc., a networking and equipment company, reeled in $35 million during the second quarter.

Pharmion was among last year’s biggest winners of venture capital in Colorado, with a $65 million investment.

The company tapped new and existing backers for its latest round, Mahaffy said. Investors include New Enterprise Associates, General Electric Pension Trust, ProQuest Investments, Nomura International PLC, Bay City Capital and Versant Ventures.

Some Pharmion managers also invested.

Venture capital funding tapered off nationwide after the tech boom ended, and investors are far more careful with their money. Not only are there fewer deals, but they’re smaller, said John Taylor, vice president of research for the Arlington, Va.-based National Venture Capital Association.

The average venture deal nationwide was $6.9 million during the second quarter, compared with $13.2 million at the peak in early 2000.

Companies specializing in life sciences, which includes biotechnology, medical devices and health care services, accounted for just 7 percent of all venture capital investments in 2000, Taylor said. By the second quarter of this year, that had risen to 30 percent.

Biotech accounted for nearly $1 billion in venture capital funding during the second quarter, Taylor said, or about 17 percent of the $5.7 billion total.

"Forty million is a fairly large investment," he said. "It’s not unusual to have these kinds of deals in the biotech industry because it takes a lot of money to get these drugs to market. It’s a long and winding road."

Pharmion has the rights to four drugs in various stages of government approval for cancer-related treatment of hematology and oncology patients, Mahaffy said. The company markets its products in the United States, Europe and Australia.

"We have a tremendous amount of activities underway," he said. "We’ll use the new capital in funding those activities as well as acquisition of new products. We want to continue to add to the portfolio," Mahaffy added.

http://www.denverpost.com/Stories/0,1413,36%257E33%257E929642%257E,00.html