BY ALEXANDER SOULE
Hearst Connecticut Media
Stamford companies tallied fewer investments in 2014 than the previous year from venture capitalists and others who take equity stakes in growth businesses. But with one company going public, the city could yet see a big return.
Though a sliver of the overall economy, the venture finance sector can be an important bellwether in gauging the willingness of investors to make risky equity investments in startups based on the information they receive from entrepreneurs, who use that money to add jobs.
Those jobs can run the gamut, from startup executives to workers manning the pitchers at Half Full Brewery.
The brewery was among 10 Stamford companies that reported raising a combined $37.8 million in financing last year to the Securities and Exchange Commission, a review of SEC listings from throughout 2014 shows.
While well below the totals of the previous year, Stamford may have added a potential blockbuster with the lightning initial public offering of stock by Loxo Oncology.
Within weeks of its formal launch in May 2013, Loxo reached a collaborative agreement with Array BioPharma that would lead to its cherry-picking a potential cancer treatment from the Colorado-based company. Loxo agreed to pay as much as $222 million if it develops the treatment successfully, and as much as $213 million for each additional product candidate that Loxo develops successfully directed at other cancer targets. Loxo believes its approach can inhibit tumor growth that result in cells multiplying out of control.
Investors sought
After raising nearly $24 million from private investors last May, within three months Loxo (Nasdaq: LOXO) held an initial public offering of stock to secure an additional $72 million.
“Fundraising is never an easy task. However, I think our investors were excited by several success stories over the last several years with cancer drug development approaches similar to ours,” said Loxo CEO Joshua Bilenker in an email. “Recent stock market outperformance in the biotech sector has certainly helped private companies raise venture capital.”
In an August conference call, Array BioPharma’s CEO singled out Loxo for its rapid launch and capitalization under Bilenker.
“It really represents a great example of innovation, speed and value creation,” said Array BioPharma CEO Ron Squarer, referencing Loxo. “They were in the clinic … just 10 months after the formation of the company.”
It remains to be seen whether Stamford will see the fruits of Loxo’s rapid growth in terms of jobs. Maintaining a small Stamford office as its headquarters, Loxo also has an office in the San Francisco area, where its chief medical officer works and which would presumably be the focus of investments as it proceeds through clinical trials.
“Many of our investors and board members are East Coast-based, so it was logical to have our corporate team here,” Bilenker said. “We also work with academic scientists in New York and Boston, who are easily visited by train from Stamford. … Over the next few years, we expect our corporate team in Stamford to grow, though more of Loxo’s hiring will take place in our West Coast office.”
The same question applies to Spinifex Pharmaceuticals, founded in Australia but listing a Stamford headquarters office where it is led by CEO Tom McCarthy. Spinifex lodged the second-largest funding total of any Stamford company at just more than $6 million, as it works to develop an oral drug to alleviate chronic pain.
State support
Gov. Dannel P. Malloy has actively been recruiting life sciences companies through an initiative called Bioscience Connecticut. Thanks in part to investments of $70 million and $60 million in a pair of New Haven pharmaceutical developers, Connecticut companies increased by 13 percent the growth capital totals they reported to the SEC, whether in the form of equity, convertible debt or rights to acquire shares in the future.
Danbury-based Odyssey Logistics & Technology reported the highest totals of any private financings in Connecticut, securing $84 million in new capital across a pair of deals. Like Greenwich-based XPO Logistics, Odyssey helps other companies schedule the transport of goods, in its case via rail, truck or container ship.
Odyssey’s massive round was enough to push Fairfield County’s fundraising totals to $218 million, a slight increase over the figure for 2013. Other companies in the region registering funding of $5 million or more included:
Women’s Marketing Holdings, a brand agency based in Westport;
Remedy Partners, a Darien company developing a new health insurance platform;
Etouches, a Norwalk company with a cloud-based platform for managing events; and
DefenseMobile, a Westport business that markets a mobile smartphone platform to veterans and service members.
After Loxo Oncology and Spinifix Pharmaceuticals, the Stamford company with the biggest private financing deal was American Halal, which sells prepared foods under the Saffron Road label at Whole Foods and other grocery markets. Under CEO Adnan Durrani, American Halal amassed $2.5 million last year in outside funding.
Other consumer companies to register funding included Sportwater Beverages, which reported raising $800,000, and Half Full Brewery, which filed notice it had raised $200,000.
More than two years after pouring its first pitchers, Half Full Brewery today offers tours and tastings on Homestead Avenue on Stamford’s West Side as it looks to expand distribution throughout the tristate area.
Hearst Connecticut Media includes four daily newspapers: Connecticut Post, Greenwich Time, The Advocate (Stamford) and The News Times (Danbury). See stamfordadvocate.com for more from this reporter.
