Local drug developer lands $10 million in funding

Nashville-based BioMimetic Pharmaceuticals Inc. has closed on a second round of funding worth just under $10 million, NashvillePost.com has learned. While Chief Executive Officer Dr. Sam Lynch

Nashville-based BioMimetic Pharmaceuticals Inc. has closed on a second round of funding worth just under $10 million, NashvillePost.com has learned.

While Chief Executive Officer Dr. Sam Lynch declined to give a specific amount, he said the series B round of funding is comparable to the company’s first round. BioMimetic raked in just under $10 million for its series A round from Novo A/S, Holden Capital, and Burrill & Co.

While those three companies renewed their interest in BioMimetic, the emerging company attracted a new lead investor for its second round: Memphis-based MB Ventures. Led by former health care investment banker Gary Stevenson, MB Venture Partners raised $22.5 million for its first fund, Memphis Biomed Ventures I LP. As a result of the investment in BioMimetic, Stevenson gained a seat on the company’s board of directors.

Of the venture firm’s $22.5 million, roughly half is funding from corporations and institutions. Among them are two investors that could prove beneficial to Lynch’s company, whose bone and tissue regenerating technologies specialize in orthopedic-related defects. The MB Ventures investors are the retiring president of Smith & Nephew Orthopedics, Larry Papasan, and Michael DeMane, president of Sofamor Danek Group, a unit of MedTronic Inc.

The benefits of having access to the expertise of Papasan and DeMane, coupled with MB Ventures' regional location, should be beneficial to BioMimetic, Lynch says. “They’re really a value-added investor for us,” he says. Lynch added that his firm had received one term sheet with commitments for $25 million-$30 million, but the valuation was less attractive than the smaller amount that the firm has accepted.

BioMimetic will use the money to complete its Phase III clinical trials on roughly 180 human patients, the last set of testing completed before a company can submit its product to the Food and Drug Administration for approval. Should those results be positive, Lynch says the company could gain FDA approval by the fourth quarter of 2004. The product would be used for the treatment of periodontal disease.

Lynch, along with Vanderbilt and the Williamson County Economic Development Council, have been spearheading efforts to construct a $74 million life sciences park in Cool Springs. Construction has not yet begun on the park, but Lynch says the project is moving forward and that more information will be available in coming weeks.

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