Biotech Raises $25 Million in Financing

Despite the tight credit market, MacroGenics, a privately held Rockville biotech, plans to announce today that it has raised $25 million in financing.

The money will be enough to fund the company's operations through 2010, said MacroGenics chief executive Scott Koenig.

It will primarily support MacroGenics' new cancer stem-cell program, which was acquired through its purchase of South San Francisco, Calif.-based Raven Biotechnologies in July. The funding will also advance the company's autoimmune, cancer and infectious disease product pipeline.

Though MacroGenics had a cash reserve, it needed to pay off Raven's debt from its failed merger with VaxGen, another South San Francisco biotech, as well as a $6 million loan and other outstanding obligations.

"This brings us back to baseline," Koenig said.

Glen T. Giovannetti, head of Ernst & Young's global biotechnology practice, said that while it is a tough market, the industry's financing hasn't completely dried up. As a slice of the booming health-care economy, biotech continues to attract investors.

"Is it impossible? No," he said. "Is it harder than six to 12 months ago? Yes."

Koenig began the task of engaging investors as he negotiated the deal with Raven, which was purchased for an undisclosed sum.

"They were very distracted by how to manage their portfolios in the current investment environment," he said. "It takes time to explore a new company and do due diligence around it. Some folks just didn't have time to do it."

But, the company persisted and fulfilled its $25 million goal. It also secured three oncology-focused firms -- Arcus Ventures, Innovis Investments and Nextech Venture -- plus pharmaceutical giant Eli Lilly as new investors.

MacroGenics already has a partnership with Eli Lilly to develop teplizumab, a drug that slows the progression of Type 1 diabetes.