Microbia Inc. today announced that it has raised $50 million in Series F funding, which will help its three lead compounds move through Phase II trials. Yes, two of those three drugs focus on [insert scatologic reference here] – specifically, chronic constipation and irritable bowel syndrome – but the third is aimed at high cholesterol, so no immaturity in the post header. Anyway, let’s play 5 Questions with Microbia CEO Peter Hecht:
1. Microbia has raised well over $200 million in total VC funding, which is a lot even for a drug company. Why do you need so much cash?
To some extent it might just be a matter of differentiating between public and private capital, since investors like Ridgeback are more public investment than private. But, in general, the business model we have is to develop and commercialize medicines – and that is a very expensive thing to do, and not that many have remained independent and done it successfully.
Some other drug companies get to market because they partner with a large pharma company that takes on some financial risk and lots of upside reward. But we and our investors have a lot of passion to get our medicines to patients ourselves.
2. Speaking of partners, has Microbia received partnership or acquisition offers?
I can’t go into much detail, but it’s fair to say that we have quite a lot of strategic options. We are always interested in talking to a potential partner if they can help provide resources we can’t otherwise access, but our bias is to retain both the risk and the upside reward. We really just want to build a great company.
3. This deal was led by Ridgeback Capital, which is more of a hedge fund than traditional venture capital firm. Why did you take them as the lead?
In our two most recent financing rounds – this one and the one around a year ago – we’ve been able to layer in a number of the most respected public investors into our investor syndicate. This has included Ridgeback, Morgan Stanley Investment Management, Jennison Associates and Maverick Capital.
I think the term hedge fund is a bit of a misnomer in these cases, as these really are just some of the best public biotech drug and pharma investors. Our goal is to create a great pharma company by developing and commercializing medicines, so I think the public/private investor distinction is somewhat artificial.
4. Do you have to sell your deal differently to these types of public investors than to traditional VCs?
Yes, but I think we’ve met these premier public investors halfway. They’re used to looking at real businesses that are selling important medicines that are helping patients… and our profile is closer the development pipeline of a public pharma company that to a small biotech startup. Our two lead programs are oral medicines that target enormous markets. So I don’t believe it’s much of a leap for them.
5. When you introduce yourself at parties, do you say you’re a biotech CEO, or that you specialize in irritable bowel syndrome?
(laughing) Neither. But it’s important to say that we don’t specialize in irritable bowel syndrome – we intend to commercialize medicines across a wide range of target areas. In addition to our lead clinical compounds in gastrointestinal disorders and cardiology, we have earlier programs in pain management, asthma and congestive heart failure.