Lawrence Regional Technology Center

Kansans invest $15 million in firm
By Suzanne King, Technology and Telecommunications Reporter

Friday, December 19, 2003

A pharmaceutical firm that moved to Lawrence from Cambridge, Mass., earlier this year has raised $15 million from private Kansas investors.

Deciphera Pharmaceuticals, which is developing drugs to attack the molecular cause of Alzheimer's disease, rheumatoid arthritis, asthma and other diseases, will use the new financing to increase staff, buy equipment and further advance its drug research.

"We're absolutely delighted to be able to raise this sort of money - not only to raise it within the time frame we did, but to raise all of this money from this area," said Daniel Flynn, Deciphera's chief executive.

Flynn declined to name the individual investors, but he said they all live in Kansas.

Earlier this year, Deciphera raised $1.5 million in seed financing from a group of Kansas investors, including the Lawrence Regional Technology Center, a business incubator; Sam Campbell & Associates, a Lawrence investor; Dec Investors, a group of Lawrence investors; Kansas Technology Enterprise Corp., a publicly financed investment fund in Topeka; and Precede Fund of Kansas City, Kan.

Company officials had hoped to raise $4.5 million in the first round of financing in 2004 and $11 million in the second round between 2005 and 2007. Flynn said the company was able to attract substantially more financing after the company successfully tested its drug platform earlier this year on three proteins.

"We told people we were going to work on our first three proteins and hoped to hit on one out of three," Flynn said.

When the company's technology worked on all three proteins, the company's sales pitch to investors got a major boost, Flynn said.

Flynn said he also had interested investors on the East Coast but was pleased to be able to turn to regional investors.

The Deciphera investment represents one of the largest investments in an area biotech company in quite some time.

Elizabeth Usovicz, vice president of consulting services with the Enterpris e Center of Johnson County, an organization that tracks venture capital investments in the area, called it "potentially a very significant investment in a local company."

In 2002, Ascend Media, a Johnson County media company, raised $50 million, a major portion of the $79.7 million raised by all area companies that year.

"It validates that you don't have to be on the coast to raise this kind of money" or to develop a life science company, said Matthew McClorey, president and chief executive of the Lawrence Regional Technology Center.

Deciphera moved to Lawrence in March. Flynn chose the city for personal reasons. He was raised in Kansas and spent 11 years at the University of Kansas. But Flynn said there also were business advantages to being in Kansas.

For one thing, the seed funding never would have financed the initial studies in Cambridge, where laboratory space, salaries and just about everything else is more expensive.

Flynn and Peter A. Petillo, chief scientific officer, moved with the company to Lawrence. Deciphera plans to have eight full-time employees by the end of the year and 17 by the end of next year.

So far, the company has attracted top scientists from San Diego and New York. It also has hired Kansans.

"The notion that you can't attract people to this area is more of a concern from people who are more business-oriented," Flynn said. "In my field, when you talk to scientists, they want to work for a premier company."

Deciphera's technology has unlocked the secret of how proteins regulate cells, Flynn said. By controlling that process, the technology can be used to attack various diseases at a specifically targeted level.

Deciphera is in discussions with pharmaceutical companies. The company hopes to license drug candidates to pharmaceutical companies that can handle human clinical trials and work on manufacturing a drug and taking it to market. Deciphera would share in the revenues.

To reach Suzanne King, technology and telecommunications reporter, call (816) 234-4336 or send e-mail to sking@kcstar.com.