VaxInnate gets $23.1M

March 12, 2004
The Daily Deal, March 12, 2004 by Clifford Carlsen
The immunology pioneer lands a second round for the development of vaccines and therapies based on the body's natural immunity.
Immunology pioneer VaxInnate Corp. has raided Merck & Co. for a key scientist cum CEO and raised $23.1 million in a second round of venture capital to fund the development of vaccines and therapies based on the body's natural immunity.
Joining VaxInnate alongside the new funding is Carlo Russo, the startup's new CEO, who was lured away from a position as head of a vaccine unit at White House Station, N.J.-based Merck.
Russo joined the company after following the scientific development of VaxInnate's founders, Ruslan Medzhitov, Ph.D., professor of immunobiology at the Yale University School of Medicine, and Richard Flavell, Ph.D., chairman and professor of immunobiology at Yale University.
"The reason I left Merck was not the business opportunity, but the science," Russo said. "I spent six years there looking at new product development, but there are only four companies working in vaccines, and the big pharma are not going to do new things."
VaxInnate landed HealthCare Ventures and Oxford Bioscience Partners LLC, both of Boston, as lead investors in the deal, and brought in Gaithersburg, Md.-based vaccine maker MedImmune Inc.'s MedImmune Ventures as a new investor. Stamford, Conn.-based Collinson, Howe & Lennox Medical Partners also returned in the deal, after leading VaxInnate's $1.5 million first round of May 2002.
The new capital will allow New Haven, Conn.-based VaxInnate to proceed with drug development programs that are expected to produce one or two so-called investigational new-drug, or IND, applications by 2006. The company is developing vaccines that act on the body's natural immune system and that can be manufactured in new ways that reduce lengthy biological processes.
VaxInnate's name derives from proprietary technology the company has for developing vaccines based on the human body's innate immunity. VaxInnate is working with science developed at Yale University to create compounds that trigger the extremely high potency of natural immune response in the body, and that don't have to be aimed at particular strains of disease.
Michael Lytton, a general partner with Oxford BioScience, said the firm's investment in VaxInnate is its first in a vaccine company, and he said the company has made breakthroughs in the way vaccines act and the way they are manufactured.
"We have traditionally shied away from the vaccine area because there haven't been any changes in the traditional ways they are developed," Lytton said. "VaxInnate is working on technology that harness natural immunity both for prophylactic and therapeutic vaccines."
Lytton added that in pitching this investment round, VaxInnate was able to demonstrate that it could reproduce the science that the founders had developed at Yale in vitro in an industrial context.
The new investment round began last summer and closed in December. The company did not disclose a valuation for the new investment or comment on whether it represented an increase from is first round.
VaxInnate did not use an outside financial adviser in putting the deal together, and called on the legal services of Wiggin & Dana LLP in New Haven.
Investors' lawyers were McCarter & English LLP of Hartford, Conn., in the financing.
Gregory Weinhoff, a general partner with Collinson, Howe & Lennox LLC, said Vaxinnate's new CEO Russo was brought in as a consultant last summer, and named CEO in December because of his experience in bringing new technology into the clinic and into the process of regulatory approval. In advance of Russo's appointment, Weinhoff shepherded the fundraising process, which he characterized as fairly simple given the company's technology.
"We found the lead investors pretty quickly," Weinhoff said. "Immunology is a hot area, and their advances are very cutting edge."
Weinhoff said his firm works closely on technology transfer with Yale, and that it initiated the formation of the company in May 2002. Since that time, VaxInnate established an initial development team and proof of principle before going out to raise money.