Oral drug delivery system developer Chiasma reported this week that it has raised $11 million in venture capital.
In November of 2006, Chiasma announced the largest funding so far for that year, as it raised $44 million in a third venture funding round. This week it reported that the same investors invested again, including ARCH Venture Partners, MPM Capital, 7 Health Ventures, Ofer Hi-Tech, and F2-Ventures.
What at first glance is a new funding round, is actually a delayed prior round. Of the $44 million from 2006, the company only received $6-7 million, and it is now receiving an additional $11 million, In essence, the original $44 million is actually $18 million, at least for now.
Venture capital funding is often paid out in installments, and if nothing out of the ordinary happens, all the money gets to the start-up. At Chiasma, something out of the ordinary did happen.
7 Health Ventures managing partner Dr. Dalia Megiddo said, "We discovered that ingredients of the formula did not survive in mass production". As a result, the investment was reclassified, and the first installment was given as part of a first round investment. Chiasma's technicians and scientists went back to the lab, and Megiddo says that they realized that some of the problematic ingredients were not necessary, and that the product worked better without them.
Now Chiasma is set for a clinical trial this year a trial that was supposed to take place in 2007.
The company will receive $9 million from investors, and another $2 million if it reaches certain milestones. There is currently no guarantee or commitment that the full $44 million will ever be paid.
Chiasma develops a system for the oral delivery of macro-molecules and poorly absorbed small molecules.
Published by Globes [online], Israel business news - www.globes-online.com - on January 15, 2009
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