WARMINSTER, Pa. – OraPharma, a company seeking to prevent periodontal disease and other oral maladies in December raised $16 million in a third round of venture capital financing.
New investor Domain Associates led the preferred-stock deal with $5.1 million, and Biotechnology Investments Limited of Guernsey, a publicly traded United Kingdom fund advised by Domain, added $1.2 million, said Domain General Partner Jesse Treu. Cincinnati-based SenMed Medical Ventures and Stockholm-based HealthCap KB also were new backers in the latest round.
Returning investors Oak Investment Partners, Canaan Venture Partners, TL Ventures and Frazier & Co. together invested about $8 million, said OraPharma President and Chief Executive Michael Kishbauch.
Founded in 1996 by the company’s management team Oak and consulting firm Scheer and Co. (story page 28), OraPharma licensed a periodontitic treatment from American Home Products, which already was in Phase II testing. OraPharma has advanced the treatment to Phase III, and the new capital will be used to complete those trials.
The therapy delivers a time-released antibiotic to the site of gum disease, and the company plans to complete clinical trials and file a New Drug Application (NDA) with the Food and Drug Administration around the end of 1999. The 18-member staff is expected to grow to about two dozen people by the time the NDA is filed, Mr Kishbauch said. Frazier Director Jon Gilbert projected the first product reaching the market by late 2000 or early 2001.
Mr. Kishbauch said OraPharma also has four other initiatives in the research-and-development stage. One involves periodontics, but the others are in oral pathology therapies, he said without providing specifics.
Chris Moller, a managing director at TL Ventures, noted a booming market for periodontal treatment because the disease afflicts the elderly, people are deferring dentures and Baby Boomers are entering middle age. But Dr. Moller also sees a broader future for OraPharma – the potential to develop biological tools for complete molecular treatment of the mouth.
The company raised $12.8 million in a combination of A and B rounds of venture funding, closing them in February and March 1997.
OraPharma has no revenue or strategic partners, although two of the four research and development projects could involve such partnerships, Mr. Kishbauch said.
Mr. Gilbert said strategic partners could help companies like OraPharma with distribution, sales and marketing and can also bring up-front licensing fees or investment.
OraPharma’s CEO said the company had not yet decided whether to manage its own marketing and distribution of the first product or to seek a partner to undertake those tasks.
Dr. Moller does not anticipate OraPharma raising another round of private financing but hopes the company eventually will hold a public offering. He believes the market will recognize the value of improved oral hygiene.
Dr. Treu agreed. “This product area has the potential of being large enough that we could take this company public, given any sort of reasonable public market, and be highly successful.” He noted that the same attributes that could make OraPharma a public hit could also attract strategic buyers.