Want to raise a mountain of venture capital to pursue your biotech dreams in 2010? Do what Kevin Judice of Achaogen did. First, find some government agencies and charities willing to commit $100 million to your R&D, then see if the VCs will pull out the checkbook.
That’s what happened earlier this year for South San Francisco-based Achaogen. The company (pronounced uh-KAY-oh-jen) raked in a $56 million Series C venture round in April from Frazier Healthcare Ventures, Alta Partners, 5AM Ventures, Arch Venture Partners, Domain Associates, Venrock, Versant Ventures, and the Wellcome Trust. It was the seventh largest venture round of the second quarter in Northern California, according to Dow Jones VentureSource.
The big idea at Achaogen—also being supported by the U.S. Department of Defense, the National Institutes of Health, and the Wellcome Trust—is to create new antibiotics with ability to kill a broad spectrum of the craftiest bacterial invaders that resist existing drugs. The concept, when Achaogen was founded in 2004, was that antibiotic resistance was becoming a big problem in the hospital, and in the community. Partly because of overuse of antibiotics, about 70 percent of hospital-borne infections develop ways to resist one or more classes of drugs, according to the Centers for Disease Control and Prevention. That leaves doctors fewer arrows in their quiver against potentially deadly bugs like MRSA (methicillin-resistant Staphylococcus aureus), which tends to make public health officials nervous. An estimated 90,000 people die from bacterial infections every year, costing the health system $4.5 billion, Achaogen says.
So, it stands to reason that if a company could build a diverse portfolio of new drug approaches for multi-drug resistant invaders, there ought to be lots of money to be made. There was relatively little competition from Big Pharma, which, then and now, was more interested in bigger markets like cancer and diabetes. But unlike cancer, where curing the disease in mice doesn’t usually help predict what will happen in humans, antibiotics that work in animals have better odds of performing well in future human studies.
“I liked the idea of starting an antibiotics company,” says Judice, the company’s chief executive and chief scientist. “The need for more antibiotics was acute and growing as time passed.”
Judice, who trained under the prominent chemist Peter Schultz at UC Berkeley in the early ’90s, seemed like the guy to tackle this problem. Judice was one of the first 10 employees at South San Francisco-based Theravance (NASDAQ: [[ticker:THRX]]), an antibiotic developer. By 2003-2004, he had moved on
