NovaCardia pulls in $48M in investments

By: BRADLEY J. FIKES - Staff Writer | Monday, September 25, 2006 8:06 PM PDT ∞

CARMEL VALLEY -- NovaCardia Inc. has raised $48 million from investors, the cardiovascular drug company reported Monday. The investment adds to the quickening pace of venture capital funding in San Diego County and Southern California as a whole.

About 80 percent of the money will go toward advanced testing of the company's flagship drug for congestive heart failure, said Randall E. Woods, NovaCardia's president. Earlier this month, NovaCardia reported favorable results from a midstage, or Phase II, trial of the drug, called KW-3902, at a meeting of the Heart Failure Society of America. The remainder will go toward developing other promising drugs.

Woods said NovaCardia attracted investor interest because of the good news about its drug, which protects the kidneys of congestive heart failure patients. The kidneys are then better able to excrete the excess fluid that builds up in these patients.

"This lead compound is addressing the only one of the major cardiac conditions that continues to increase in incidence," Woods said. Other heart treatments have been so successful that people have survived longer. Since congestive heart failure occurs more often as people get older, these people who would otherwise have died are increasingly at risk.

NovaCardia's financing is the fourth largest so far this year for a San Diego-area company. The leader is Zogenix, a Carmel Valley developer of migraine therapy, which raised $60 million on Aug. 28. Cadence Pharmaceuticals, also in Carmel Valley, raised $54 million on Feb. 22. And in Sorrento Valley, Artes Medical got $51 million.

This year to date, $823 million has gone into companies based in San Diego County, according to SoCal Tech, a Los Angeles-based tracker of venture funding. The total for all of Southern California is $2.57 billion. During the corresponding period of 2005, San Diego companies had raised $578 million. Southern California companies raised $1.54 billion.

Woods said the increase in funding is a sign that investors recognize that good technology is available. But also, it means that the cash needs of San Diego's biotech/biopharmaceutical industry are getting larger. As companies get closer to market, their expenses increase.

"San Diego's biotech industry is growing up," Woods said.

NovaCardia is accomplishing its goal without a large infrastructure. Woods said the company has just nine employees, one a half-time employee. The clinical trial work has been contracted to Duke Clinical Research Institute, a North Carolina-based company. This spares NovaCardia the large overhead of its own development staff.

The second-round investment was made by a team of venture firms consisting of Skyline Ventures, Interwest Partners, Domain Associates, Forward Ventures, Montreux Equity Partners and Veritas Software. The company raised $28 million in its first round, Woods said.

-- Contact staff writer Bradley J. Fikes at (760) 739-6641 or bfikes@nctimes.com.

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