South Side startup raises $8M for human trials of anti-inflammatory drugs
Complexa Inc. is planning human trials of a new class of anti-inflammatory drugs to treat diabetes, kidney failure and other diseases next month, but getting there involved more than medical science.
The South Side-based startup company raised more than $8 million from venture capital investors during the last two years to license and develop molecules discovered and patented by Professor Bruce Freeman and a team of researchers at the University of Pittsburgh.
Complexa is a “great example” of the success Pittsburgh technology companies are having in raising money from so-called angel investors, said Rich Lunak, CEO of Hazelwood-based Innovation Works, a government-funded nonprofit that invests in startups and is one of the nation's most active seed-stage investors.
“The company would not be here except for the Pittsburgh Life Sciences Greenhouse and Innovation Works, which provided seed money and carried us for a long time,” said Complexa's CEO Joshua Tarnoff.
The seed money and other funds raised from venture capital investors have helped the company's anti-inflammatory drugs progress from animal to human trials.
A report issued on Thursday by Innovation Works and Ernst & Young said technology companies in Pittsburgh continue to outpace national averages in money raised from venture capital investors. Since the end of the Great Recession in 2009 through 2013, the region has had a 112.9 percent increase in such financing, compared with 54.6 percent nationally. The study used data from Dow Jones Venture Source and Innovation Works, which tracks all local venture capital activity.
The report said $338 million in venture capital money was invested in 148 transactions in the region in 2013 by more than 120 venture firms. That's up from $329.1 million in 165 deals in the region in 2012 and $159.1 million in 113 deals in 2009.
Some investors appear to have been handsomely rewarded for taking risks in Pittsburgh-area companies. During the five-year period, some of them cashed in their holdings in 34 companies in transactions valued at more than $3 billion, the study said.
“We see a robust region that is gaining momentum over the past five years in terms of seed-stage investment, exits and the diversity of sectors being funded,” said Lynette Horrell, managing partner of Ernst & Young's Pittsburgh office.
Pittsburgh's research universities — Carnegie Mellon, Duquesne and Pitt — “are spinning out technologies and companies at an increasing pace, which makes Pittsburgh poised for even greater investment,” Horrell said.
Complexa is focused on developing anti-inflammatory drugs that could reverse the effects of diseases such as diabetes, based on naturally occurring nitro-fatty acids, Tarnoff said. “We have more than 100 published papers in top medical journals by others who have looked at this technology and replicated its results,” he said.
For diabetes, the drugs work to normalize blood glucose levels by turning on the anti-inflammatory pathways in the body, and turning off inflammatory pathways, Tarnoff said.
Freeman, the professor who is chairman of the Department of Pharmacology and Chemical Biology at Pitt, along with his team first observed the agents in the 1990s. The main patent on the technology was issued in 2012.
About 12 employees and contractors are working to bring Complexa to phase one human trials, he said. Phase one trials determine dosage levels and whether a drug is safe for humans, but not whether it is effective. If successful after 18-20 months of tests, Complexa will face a decision on whether to raise more money from investors, license or sell its biotechnology, he said.
An improved economic climate for venture funding and a growing number of successful sales of companies in the Pittsburgh region is a sign of strength for investment activity in the region, according to the report.
Pittsburgh ranked third in venture transactions among regions that are active technology hubs with 52.5 deals per 1 million residents, behind only Boston with 101.3 and Austin at 62.7. The region was ahead of Raleigh-Durham-Chapel Hill, N.C., at 42.7; Denver at 30.2; Philadelphia at 26.9; and New York at 23.9.
Lunak said that “shows our great companies are able to attract the capital they need to grow.”
The region showed a 34.6 percent increase in venture investment dollars per capita and improved to eighth place from 12th place in a ranking of 18 regions.
During the past five years, 249 companies received $1.56 billion in venture funding. The study said 57 percent went to information technology and 25 percent to life sciences/health care companies.