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Home > About BNE > Press Room > Current Articles > March > Kinex research receives a boost

                                                                                                     

Kinex research receives a boost

Business First of Buffalo - by Tracey Drury Business First

                                                                                                                                                                                                                                                                                                 Kinex Pharmaceuticals LLC has closed on a $3 million round of angel funding, bringing its total capital raised to $9 million.

The Buffalo company has relied almost entirely on angel investors for its funding, with just $1 million coming from institutional investors. With its anti-cancer drugs in clinical trials, the company is negotiating with several pharmaceutical companies and expects to sign a licensing deal by summer.

Lyn Dyster, vice president for drug discovery, says the company is poised for takeoff.

"People say you can only raise $1 million to $3 million through angel investors and we've raised $8 million," she says.

Dyster says though the company has investors from across the country, Western New York angels are an important part of the mix. Existing investors made up two thirds of the new financing, which was its biggest round to date.

Clinical trials of its KX2-391 oral drug began in the fall. The drug is designed to inhibit the growth and spread of tumors for all major cancer types. The company has said it has been especially effective in inhibiting leukemia cells. Kinex, which also develops pharmaceuticals for diseases of the eye and hearing loss, has received four patents in the last two years.

Dyster says the new angel funding enables development beyond the clinical trials and also gives the company more leverage as it continues to negotiate with pharmaceutical companies.

"We wanted to have a cushion of cash so we'd be in the strongest position possible while we're negotiating," she says. "We also raised the bar on the minimum investment that came in. There's some heavy hitters here and they understood the whole purpose was so we could negotiate from a position of strength."

Kinex will likely see a significant upfront payment once a licensing deal is signed, if similar deals nationally are any indication.

Last July, GlaxoSmithKline signed a deal with Targacept Inc. for development of drugs for nervous system diseases that gave Targacept an upfront payment of $35 million, including a $15 million equity investment.

In February, Celgene Corp. signed a deal with Acceleron Pharma Inc. for development of a bone-forming compound, with Acceleron receiving $50 million upfront, including a $5 million equity investment.

With eight full-time staff, Kinex expects to add up to six employees by year-end. Ultimately, it could employ 30 to 40.

Founded in 2003 as a spin-off from the University at Buffalo, the company currently operates from space at the UB Center for Excellence in Bioinformatics and Life Sciences. By next fall, Kinex will move down the street to a 5,600-square-foot space in the former Trico Building, which is being developed by the Buffalo Niagara Medical Campus for life science company tenants.