Venture Update Vol VII, #6, July 2003

Done Deals

Raleigh – Nitronex Corp. (www.nitronex.com), a developer and manufacturer of advanced RF power transistors for use in wireless communications networks, has secured $11.3 million in a series C round of venture financing. Participating in this round of financing were Atlanta-based Alliance Technology Ventures, California-based TPG Ventures, California-based VantagePoint Venture Partners and other previous investors of Nitronex. Nitronex will use the funds to support the product development and launch of its Sigantic RF power transistor family, for use in wireless base station power amplifiers. Including this latest funding round, the company has raised more than $46 million since its founding in 1999. Nitronex, which has about 60 employees, is working to revolutionize cellular telephone base stations by replacing silicon chips with gallium nitride chips. Contact Andrea Koller (919.807.9100 x157).

Greensboro – APEX Analytix (www.apexanalytix.com), a professional services and software provider in the recovery audit and contract compliance space, has closed on a $7 million first round of venture capital. The Series A Preferred Financing round was led by Noro-Moseley Partners and RTP's Wakefield Group, and it marks the first outside investment since the company's inception 15 years ago. APEX Analytix plans to use the funds for product development, sales and marketing programs, strategic alliances and complimentary acquisitions. Contact Steve Nelson (919.806.4224).

RTP – Metabolon, a startup focused on the interaction of small molecules, has closed on $4 million to move its technology forward. Metabolon's venture round was led by Durham's The Aurora Funds, which previously provided Metabolon with seed funding. Other investors included South Carolina's Trelys Ventures, California's Alexandria Real Estate Equities, and an investment group led by J. Craig Venter, the founder and former president of Maryland's Celera Genomics, the company that mapped the human genome. Venter is a member of Metabolon's scientific advisory board. Metabolon's CEO John Ryals, who is co-founder and former CEO of RTP's Paradigm Genetics, said Metabolon was doing research for established pharmaceutical companies while it worked to discover drugs of its own. Contact John Ryals (919.597.6680).

RTP – Southern Capitol Ventures (www.southerncapitolventures.com), an RTP-based investment partnership for early-stage tech companies in the Southeast, has closed its $4.5 million Fund I. Southern Capitol's fund provides early stage investments to regional technology and life science firms. The North Carolina Biotechnology Center (www.ncbiotech.org) is providing technical and financial support to the fund, which plans to make life science and information technology investments typically between $100,000 and $500,000. Southern Capitol has invested in select portfolio companies including ChannelAdvisor, Pinpoint Networks, FullSeven Technologies, Overture Networks and Batanga. Contact Jason Caplain (919.858.7580).

Durham – Source Food Technology Inc. (www.nextraoil.com) has closed on approximately $1 million from the Spargil Fund and Spencer Trask. Source Food Technology is a privately held food ingredient company specializing in nutritionally advanced cooking oils. Source Food will use the capital for increased manufacturing and distribution of its product Nextra, a cooking oil that has an increased fry-life and enhanced food taste. Source Food also claims that Nextra is healthier than partially hydrogenated vegetable oil because it has no trans fats from hydrogenation and no cholesterol. Contact Kevin Quartz (919.277.1164).



On The Up

ArrayXpress, Inc.
Raleigh, NC

In the past several years, a discovery-based research technology called DNA microarrays has attracted tremendous interest among scientists because it promises to provide a better picture of the interactions among thousands of genes simultaneously. ArrayXpress, Inc., a recent spinout from North Carolina State University, has taken this gene discovery tool to even higher levels.

ArrayXpress, which is using technology developed at NCSU, has found a way to significantly limit “background noise” in microarray procedures, which helps yield higher quality data than other platforms.

“We have a strong competitive edge in quality and price over other methods out there,” said Michael Zapata, the former LIPSinc CEO who is currently serving as interim CEO of ArrayXpress.

Microarray technology is having a significant impact on genomics study. Many fields, including agribusiness, drug discovery and toxicological research, are benefiting from the use of DNA microarray technology.

ArrayXpress offers a complete microarray system from initial experimental design to final data analysis. Zapata said ArrayXpress' service is the only commercial end-to-end custom solution on the market and produces higher quality data at a lower overall cost (discovery through commercialization) than any partial solution on the market.

To analyze the data generated by its microarray procedures, ArrayXpress has a relationship with Cary-based SAS Institute, which developed software to accelerate the transformation of huge quantities of data into useful information. In addition, ArrayXpress already has two paying customers that sought out ArrayXpress for their quality. Beyond these major contracts, ArrayXpress won a $6,000 prize in the Open Division of the NCSU College of Management Business Plan competition in May 2003.

The company (www.arrayxpress.com) is seeking seed stage capital to help pay for equipment and personnel capacity in order to move forward on additional contracts.

Contact Michael Zapata (919.696.7814).



New Developments

Durham – Inspire Pharmaceuticals (www.inspirepharm.com, Nasdaq: ISPH) has received “priority review” status from the U.S. Food and Drug Administration (FDA) for the new drug application for its dry eye treatment. Inpsire's dry eye drug, diquafosol, could be on the market early next year if the approval process goes as expected. Initial action from the FDA should come within the next six months. The FDA grants priority review when it acknowledges a drug has the potential to address a significant unmet medical need. Contact Mary Bennett (919.941.9777 x245).

RTP – AlphaVax (www.alphavax.com) has begun human trials for its ArV technology, which has been employed to develop a new vaccine for HIV, the virus that causes AIDS. The ArV clinical trial will evaluate the technology's safety and immune potential using an HIV gene from the subtype of the virus that is prevalent in South Africa. The trial will involve 48 non-HIV infected participants in the United States and South Africa at four different dose levels. AlphaVax officials said the ArV technology targets the human immune system and is able to trigger responses at the cellular level. AlphaVax, which employs 41 people in the Triangle, said being able to trigger cellular immunity will open the door to providing immunity against diseases such as HIV. Contact Peter Young (919.595.0400).

Chapel Hill – POZEN Inc. (www.pozen.com, Nasdaq: POZN) announced that the U.S. Patent and Trademark Office has issued a patent protection for its MT 400 technology for treating headaches. The new patent strengthens the company's patent protection for MT 400 technology by providing additional claims relating to pharmaceutical compositions and treatment methods that can be used for migraine patients. In addition, POZEN announced the expiration of a government waiting period, which allows $25 million in initial payments to POZEN by GlaxoSmithKline (www.gsk.com) in connection with their joint development of a new migraine treatment. Now that the waiting period is over, POZEN and GSK will proceed with development and commercialization of its migraine drug. POZEN also announced that it has filed a new drug application with the U.S. Food and Drug Administration (FDA) for its anti-migraine drug MT 100, which is an oral first-line therapy for the acute treatment of migraine. Contact Lisa Barthelemy (919.913.1044).

Winston-Salem – Targacept, Inc. (www.targacept.com), has received a federal grant for innovative drug discovery research. The National Science Foundation awarded the Phase I grant to Targacept through its Small Business Innovation Research (SBIR) program. The grant will support Targacept's collaborative research with the Department of Biomedical Engineering at Wake Forest University's School of Medicine (WFUSM) to develop computer software designed to predict biological activity of small molecules. The company did not disclose the grant amount. Contact Debra Perret (336.480.2226).

Chapel Hill – Synthon Pharmaceuticals, Ltd. (www.synthon-usa.com), announced that the U. S. Food and Drug Administration (FDA) granted final approval to its Paroxetine Mesylate 10 mg, 20 mg, 30 mg, and 40 mg tablets for the treatment of depression, obsessive/compulsive disorder and/or panic disorder. Synthon's Paroxetine is an alternative for patients in need of, or currently undergoing, selective serotonin reuptake inhibitor (SSRI) therapy and will be an alternative for physicians prescribing paroxetine therapy. Synthon's new product will provide patients, taxpayers, insurers and other third-party payers with a more affordable alternative for patients on paroxetine or other branded SSRI therapies. Contact Greg Howard (301.203.4305).

Durham – Duke University Medical Center (http://www.mc.duke.edu), UNC-Greensboro (www.uncg.edu), and Moses Cone Health System (www.mosescone.com) are collaborating to form a new research program that will develop human genome data for treatment of Alzheimer's and heart diseases. The project has received a $4 million start-up grant from the defense appropriation bill, approved recently by the U.S. House of Representatives. The project is intended to increase awareness of genetics and the impact of genomics on medical practice through the development of an educational program for health professionals and the community. Contact Joe Bonfiglio (202.225.3032).

Chapel Hill – UNC-Chapel Hill alumni Vaughn and Nancy Bryson have committed $5 million to establish a clinical genetics research center at UNC-Chapel Hill (www.unc.edu). The Brysons, who live in Florida and Michigan, are 1960 graduates of the UNC School of Pharmacy. Vaughn Bryson is a former CEO at Eli Lilly and Co. Beginning this month, the center, a component of the Carolina Center for Genome Sciences, will bring researchers, physicians and medical faculty together to explore the relationship between genetics and diseases and address the need for trained clinical geneticists. Four new buildings affiliated with genomics research are supported by a combination of funds from the statewide higher education bond referendum, prior state appropriations and campus sources including private gifts. Contact Les Lang (919.843.9687).

RTP – Kyma Technologies (www.kymatech.com) has received four government contracts totaling $1 million. The contracts come from the U.S. Department of Defense and the U.S. Department of Energy to support the company's development of substrate materials for electronics manufacturers. These applications range from new solid state lighting to advanced transmits and receive modules for radar applications. The company plans to channel the funds into developing its GaN substrate for the optoelectronics, communications, and microelectronics industries. Contact Edward Pupa (919.789.8800).

Raleigh – The North Carolina General Assembly (www.ncga.state.nc.us) has voted to extend the Qualified Business Venture (QBV) Tax Credit, which allows individuals up to a 25 percent state tax credit for investments in qualified small companies. The North Carolina Biosciences Organization (NCBIO) and CED collaborated on retaining and supporting this lobbying effort for the extension of the QBV Tax Credit, with support from angel investors and other partners such as North Carolina Citizens for Business and Industry, the Greater Raleigh, Durham, Greenville-Pitt and Winston-Salem Chambers of Commerce, and NCEITA. Raleigh attorney and lobbyist Harry Kaplan led the lobbying efforts to extend the tax credit. The QBV Tax Credit, which is limited to $50,000 for an individual and is capped at $6 million total statewide each year, will help qualified early stage companies attract angel investments. Contact Sam Taylor (919.212.1833).



Mark Your Calendar!

Capital Connection Luncheon
September 10, 2003
RTP, NC

InfoTech 2003 Conference
October 27, 2003
RTP, NC
www.cednc.org/infotech

SEBIO 2003 Conference
November 10 & 11, 2003
Pinehurst, NC
www.sebio.org

For more information, visit the CED Web site (www.cednc.org) or call 919-549-7500.

Venture Update is published by the Council for Entrepreneurial Development (CED) an entrepreneurial support organization located in the Research Triangle Park, N.C.

Lisa Rowe-Ralls, editor
P.O. Box 13353, RTP, NC 27709
Phone: 919-549-7500
FAX: 919-549-7405
Email: news@cednc.org