Hot Deal: Venture Firms Flock to Biotech Guru Zaffaroni’s Latest Effort –

When you’ve got a track record like that of Alex Zaffaroni, picking up a first round of $45 million is to be expected. Among the companies Zaffaroni founded are Alza Corp., a drug delivery company that was acquired by Johnson & Johnson, Affymax, a drug discovery company acquired by GlaxoSmithKline, and Affymetrix, a publicly traded biomedical researcher. His latest effort is Alexza.

A source close to Zaffaroni says that he is so bullish about the startup that he has said he believes it can be his biggest hit yet. VCs rushed to get in on the action. The deal was co-led by Frazier Healthcare Ventures and Versant Ventures. Other participants included Alloy Ventures, Burrill & Co., CMEA Ventures, New Enterprise Associates and Zesiger Capital Group.

Alexza, based in Palo Alto, Calif., and founded in 2000, won’t say exactly what it’s up to because it’s in stealth mode. The most it will say is that it has developed technology to deliver prescription drugs faster to alleviate acute and episodic symptoms.

“There are numerous prescription drugs out there that could be more effective if they could work more immediately,” says Allen Frazier, managing partner of Frazier Healthcare Ventures and a member of Alexza’s board. Frazier notes that his firm’s strategy lies in finding opportunities to invest in products that are in development rather than research. He adds optimistically that Alexza is in a strong competitive position, based on its ability to create a platform that allows for the rapid onset of therapeutic action in a non-injection form.

Frazier says he expects to complete a second round of financing within the next 24 months, but he is not looking beyond that. “An eventual IPO would be ideal, certainly, although we really don’t have a time table yet as far as an exit strategy. But we are excited about the technology and about working with Alex.”