In this era of tight capital markets it takes a multi-pronged effort to raise funds for most early stage technology companies. As our team at Phoenix PharmaLabs, Inc. has worked to raise funding to enable the continual development of our family of safe opiate drugs we have explored and/or tried a variety of ways to raise that money. Some of these include private placement with angel investors, exploring Venture Capital funding, visiting various Wall Street banks with an eye towards an eventual possible public offering, bridge loans, grants, out-licensing of technology, and partnering or collaboration efforts. Recently we have begun learning about “Crowd Funding”.
Phoenix PharmaLabs, Inc. (PPL) is a privately held, Utah-based, IND-stage drug discovery company focusing on the development and commercialization of new non-addictive treatments for pain and new therapies for the treatment of opiate addiction. PPL was founded in 2002 with the mission of bringing its new class of opioid pain therapies and addiction treatment to market. (see: http://www.phoenixpharmalabs.com/)
PPL has designed a novel family of ligands with high binding affinity at all three opiate receptors: mu, kappa and delta. These unique ligands, derived from opioid backbones using proprietary technology, have more balanced receptor activity than morphine and other opioids, with partial agonist / antagonist activity at mu, relatively higher, but not full, kappa agonist activity, and moderate delta activity. This profile results in first-ever opiate analgesics that appear to be non-addicting and free of all significant dangerous side effects.
“Crowd Funding” is the most recent avenue for capital acquisition that our team has explored. Although we have not committed to a crowd funding initiative we are investigating this new source of funds that has proven successful for other companies with lesser value propositions.
Wikipedia explains Crowd Funding as follows: “Crowd funding or crowdfunding (alternately crowd financing, equity crowdfunding, or hyper funding) describes the collective effort of individuals who network and pool their resources, usually via the Internet, to support efforts initiated by other people or organizations. Crowd funding is used in support of a wide variety of activities, including disaster relief, citizen journalism, support of artists by fans, political campaigns, start-up company funding, movie or free software development, and scientific research.
Crowd funding can also refer to the funding of a company by selling small amounts of equity to many investors. This form of crowd funding has recently received attention from policymakers in the United States with direct mention in the JOBS Act; legislation that allows for a wider pool of small investors with fewer restrictions. The JOBS Act was signed into law by President Obama on April 5, 2012. The U.S. Securities and Exchange Commission has been given approximately 270 days to set forth specific rules and guidelines that enact this legislation, while also ensuring the protection of investors. Some rules have already been proposed by the SEC.” (see: http://en.wikipedia.org/wiki/Crowd_funding for more information from Wikipedia on the subject and for references shown here)
Some crowd funding initiatives have reportedly raised more than $10 million in a short time. There are many spins on this type of fund raising. At least one of them deals with reaching crowds of qualified investors.
Over the years PPL has been able to rely in part on grant money from various government agencies that have believed the company’s science and business model. PPL has been grateful for the past contributions of the Small Business Administration, National Institute on Drug Abuse (NIDA), and the National Institute of Health (NIH). Some of these sources and others may still be available to PPL in the future. PPL is in pursuit of additional grant money at this time. The company has been successful in obtaining funding from these sources in the past. (For example see: http://www.areainfo.net/articles/show.php?cty=Logan&st=Utah&article_id=417).
Angel investors have been especially generous in providing ~$900,000 in funding over the last several years to PPL. It takes time and commitment to visit possible angels and explain your vision, your science, your plans, and your timeline to reach a return on investment and/or an exit. Most of these people are, of course, qualified investors with experience in the stock market and a net worth of over $1 million. Even now PPL is working with angels to raise additional funds for short term needs. The company believes this will likely be the last time it needs to raise money from angel investors.
Out-licensing opportunities continues to be an avenue PPL pursues in order to further its research and development in partnership with other large pharma and animal science companies. One such agreement with Aoxing Pharma has already been signed (see: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a6Cb8lAUCR_c ) Other companies are working with PPL already in the areas of animal applications, drug addiction therapy, and pain research. Although these relationships have not yet reached maturity they hold great promise of becoming important licensing agreements. PPL’s strategic objective is to enter into a strategic alliance with an appropriate market leader that has the resources and motivation to further develop, commercialize, and maximize the market potential of PPL’s family of drugs. To that end the company continues to work. In the meantime, PPL has not given up on other avenues of funding to complete development work.
Venture Capital (VC) funding has become more scarce and expensive in the Pharma market. VC’s often want control of a company before they are willing to invest. If you are not interested in giving up control of your company, this may not be the route for you. Life Science Leader magazine (see: www.lifescienceleader.com ) reported in its October 2012 issue that life sciences venture funding has dropped. They stated that “Early-stage deal volume declined by 16% in the second quarter of 2012.” Of course, if your technology is interesting enough and the returns great enough you may still find this an avenue of fund raising that may yield important early money.
Today, in order for young technology companies to finance their growth and research they must run multiple financing strategies simultaneously. Committing early to push forward on multiple fronts of funding is important to a company’s success. Boot strapping and internally generated funding is seldom possible for a research company. Adequate backing is key to reaching the finish line.
DONATE TO PHOENIX PHARMALABS, INC. HERE: <a href="gofund.me/PPLPhase0">Link</a>
see also: https://www.area-info.net/articles/show.php?cty=Logan&st=Utah&article_id=1912