Argos Therapeutics, a Durham company that is developing a promising treatment for kidney cancer, has defied a difficult fundraising environment by raising an impressive $42.5 million in venture capital.
I think it still remains difficult to raise money privately, said CEO Jeff Abbey. It remains even more difficult to raise more than $40 million. That was a challenge.
Abbey said Argos, which previously raised $114 million over four rounds of funding from outside investors, was able to attract its latest infusion of capital on the strength of the results from its Phase 2 study of its experimental kidney cancer treatment. The money will be used to fund a Phase 3 study the final phase required by regulators before seeking approval to put a drug on the market that was launched in January and ultimately is expected to include 450 patients.
The Phase 2 results found that 21 patients who would be expected to survive an average of 14.7 months instead survived 30.2 months on Argos experimental drug. In addition, seven of the 21 patients or one-third have remained alive for more than four years, versus an expected survival rate of less than 5 percent for that extent of time, Abbey said.
Still, the 90-employee company had to search far and wide for funding all the way to Russia and South Korea.
The lead investor in the companys latest investment round, which it plans to announce Monday, is the investment arm of Russias largest drug company, Pharmastandard. Green Cross, a Korean drug company, also invested alongside Argos existing investors, which include Triangle venture capital firms Intersouth Partners and Aurora Funds.
Argos, which has no products on the market, is also developing an AIDS drug that has received $40 million in funding from the National Institutes of Health.
Funding levels down
The Triangle venture capital market has been in a funk for about two years, with the amount of money raised by local startups to develop new technology or fuel their expansion down sharply. The $42.5 million that Argos attracted is the most by a Triangle company this year.
In recent months drug-development companies have had good luck raising funding in the public markets through an initial public offering of stock, or IPO. In the Triangle, Chimerix and Heat Biologics raised $117.9 million and $25 million, respectively, with successful IPOs this year.
But Abbey said Argos started its latest fundraising effort last fall, before the IPO market heated up, and by spring had worked out investment terms with Pharmastandard. Since then it has been working to line up existing investors.
We remain in discussions with a handful of investors and may be adding to this financing in the relative near-term, he said.
Abbey also didnt rule out an IPO down the road.
If the market remains strong, its obviously something we would consider, he said.
IPO plans shelved
Argos actually hoped to raise about $75 million via an IPO in early 2012, but switched gears in the wake of what was at the time a lackluster market. Plan B was raising $25 million in venture capital funding in April 2012 and then embarking on raising more money last fall.
Since April 2012, the company has added more than 30 employees.
Weve pretty much completed all the hiring we need to run the Phase 3 trials, Abbey said. Instead, the companys new funding will pay employee salaries and underwrite the cost of the drug trial.
Argos expects to complete the Phase 3 trial and be in position to seek regulatory approval for its kidney cancer treatment, assuming that the test results are positive, in 2016.