In February 2012, Celgene made a strategic investment in Boston-based biotech Acetylon Pharmaceuticals, which was developing
promising treatments for multiple myeloma and other diseases. The Big Biotech paid $15 million for preferred shares of Acetylon.
The investment did not include any technology rights or license option rights. By then, the barely four-year-old startup had
already raised $40 million to finance its programs without taking any money from traditional venture capital sources.
G. Steven Burrill
Acetylon was started in 2008 to build out a technology platform for a new class of selective histone deacetylase (HDAC) inhibitors
that hold promise for causing tumor cell death without the severe side effects associated with the first class of HDACs on
the market. Initial funding came from Marc Cohen, Acetylon's chairman and a trustee at Dana Farber Cancer Institute where
the technology was developed. Along with some friends, he put up approximately $400,000 in seed capital to start the company
and brought in Walter Ogier, Acetylon's president and CEO, as its only employee to run it.
By July 2009, Acetylon received $7.25 million from a group of angel investors, hired some staff, and advanced its research
and development. When its lead drug candidate was ready for human testing, Acetylon turned to the Leukemia and Lymphoma Society,
which is providing approximately $6 million in nondilutive, milestone-based, and conditionally repayable funding, representing
half of the projected costs of the clinical trial. Acetylon went on to close a $27-million second round of financing from
its existing venture philanthropists plus other private investors two months before the Celgene funding.
Acetylon's story is being played out among many life-sciences startups as they look for funding beyond traditional venture
capital to angel investors, venture philanthropy, non-profit organizations, and foreign government funds looking for innovative
technology to develop for their countries. In some cases, these other entities are filling the void left by venture capitalists
that have moved away from early-stage financings.
Companies taking advantage of the different sources of capital led to a 22.8% increase in the total amount raised by privately
held life sciences companies globally in 2012 to $12.4 billion compared with the $10.1 billion raised in 2011. Although many
decry the lack of funding for early-stage life sciences companies, capital is available.