PhotoThera raises $50 million for stroke clinical trials

Posted By helen.chang On June 29, 2009 @ 2:14 pm In Business | 3 Comments

PhotoThera, Inc., is proof that innovative biotech products can still prompt investors to unlock the safe.

In May, the Carlsbad company closed a $50 million round of financing led by the global equity firm Warburg Pincus to fund a final clinical study for its transcranial laser therapy, called NeuroThera.

The therapy, using a ray of near-infrared light, is employed within 24 hours of a stroke to protect brain cells. It was developed by chief scientific officer Dr. Jackson Streeter to achieve his goal of conquering one of medicine’s thorniest problems – how to protect the brain during an ischemic stroke, a cause that became Streeter’s concern after a mentor died suddenly of a stroke at age 62.

The first medical doctor to be a pilot in the elite U.S. Navy Fighter Weapons School – more commonly known as Top Gun – Streeter left his dream job in 1997 on June 30. The very next day, he went to the bookstore to buy a book on writing a business plan and filed papers to start his own company.

“I had no idea how hard it would be to get people interested and get funding,” he said. “I was pretty naive. I thought the challenges would be more around the science and medicine, rather than raising money. I had no appreciation for the challenge of getting funding.”

Successive funding

For the first few years, Streeter put in all of his own money and borrowed from friends and family. After making his pitch to more than 50 companies, and crashing a Goldman Sachs investment meeting in San Diego, Streeter drummed up $750,000 in financing. Positive data in animals helped him raise additional monies needed for two clinical trails.

The results of the second study trail were published in February 2009 and laid the groundwork for the upcoming third trial, which will secure the necessary data to support commercialization of the technology. In addition to Warburg Pincus, participating investors include The Vertical Group L.P., Hamilton BioVentures, Delphi Ventures, DeNovo Ventures, and certain individual members of Monterey Advisors, Inc.

Strokes prevalent

According to the American Stroke Association (ASA), stroke is the third leading cause of death in the United States, with approximately 700,000 strokes annually. Ischemic stroke accounts for approximately 83 percent of all strokes and occurs because of an obstruction in a blood vessel supplying blood to the brain.

Currently, the most promising treatment for ischemic stroke is the FDA-approved clot-busting drug tPA, which must be administered intravenously within a three-hour window from the onset of symptoms to work best.

According to the ASA, only 3 percent to 5 percent of those who suffer a stroke reach the hospital in time to be considered for this treatment.

With its 24-hour window, NeuroThera provides victims with a much longer period of treatment time.
The noninvasive NeuroThera uses the low-level beams to stimulate tiny cell structures called mitochondria which provide energy for each living cell. The mitochondria in neurons shut down during a stroke, leading to the death of brain cells. When the laser is absorbed, it basically kick starts the mitochondria into producing energy again and cells are saved.

Funding success

Streeter attributes his funding success to his company’s three strengths:

— Outstanding science and clinical studies
— Meeting a market need
— Strong intellectual property.

“We have an outstanding team that is able to succeed at these complex stroke trials required by the FDA,” Streeter said “We have relationships with the leading stroke centers throughout the world, so it is less of a risk for our investors. We have built a safe product on sound science.

“Also, from a business standpoint, there is an enormous unmet need in the area of stroke, so there is a large potential market. Once those brain cells die in a stroke, there is no therapy other than rehabilitation.

“And we make sure that we have a robust intellectual property around the device and the method of delivery,” he said.

President and CEO Art Taylor said he expects to enroll patients in the third trial in early 2010 and plans for a two- to two-and-half-year trial. The company is also researching using the medical device for other brain disorders, such as Alzheimer’s Disease.

See more stories:

OraVerse raised funds by focusing on niche dental products ^[4]
Genoptix listened to the market to hone its products ^[5]
San Diego’s biotech companies tighten belts, but some thrive ^[6]

Shannon Rose Strybel is a freelance writer based in San Diego.