The Bernstein Report on BioBusiness

By Stacy Lawrence
Senior Writer

Making bets on expanding waistlines and receding hairlines, last week PureTech Ventures put more money in two early stage companies it had helped found: obesity play Gelesis and hair loss prevention company Follica.

In both cases, PureTech created a company, as it often does, by starting with a particular indication or research focus and then developing a company based on current research in the field.

Interwest Partners led the $5.5 million financing for Follica. An interest in aesthetic medicine is what initially motivated PureTech to create the company, according to Daphne Zohar, the company's CEO and founder as well as managing partner of PureTech.

Zohar told Ebb & Flow there is substantial science in academic institutions addressing aesthetic medicine. She also noted these types of treatments don't face the same reimbursement issues other indications do.

Follica is developing a device/therapeutic combination intended to generate new hair follicles. According to a paper published last Mayin Nature, the technology licensed by the company did so in mice. To successfully demonstrate that in a clinical trial in humans is the goal of this financing.

Zohar said that both the device and the therapeutics involved are already approved for other purposes, which makes a proof of concept trial relatively inexpensive.

"We didn't want to take in too much money. Since we are using existing drugs and device procedures, we can get answers very quickly in people," she said.

Zohar noted that it can be difficult to keep early rounds from being too big. "We have to struggle to make the rounds smaller; we're often under a lot of pressure to take in more money. But in this case we had a fund that was very flexible."

In 2007, the average A round was $19.5 million, a new high. The mean size of the first institutional round has risen almost every year since 1999, when it was $5 million.

Gelesis was co-founded in 2006 by PureTech and Israeli biomaterials company ExoTech Bio Solutions, with seed funding from PureTech and a $1 million grant from the BIRD Foundation, which supports R&D for the development of U.S. and Israeli businesses, PureTech principal Eric Elenko told Ebb & Flow. He declined to provide details about Gelesis.

OrbiMed Advisors led last week's $16 million A round. OrbiMed's Jonathan Silverstein was named chairman and the firm's Rishi Gupta also joined the board.

Also joining the board are Klaus Veitinger, former CEO of Schwarz Pharma in the U.S., and Chen Schor, CBO of Epix. They will join Gelesis CEO Yishai Zohar, formerly a PureTech partner, and Ronald Cape of PureTech, as well as Mendy Axlerad, co-founder and CTO of ExoTech.