Domain, Rusnano Alliance Pumps $20M into SD’s CoDa Therapeutics

Xconomy San Diego — 

Domain Associates turned some heads in the venture capital world in March when it struck a deal with Rusnano, a Russian state technology firm, to jointly invest $760 million in biotech companies in the U.S. and Russia. Now the first investment from that collaboration is going to a Domain portfolio company not far from its San Diego office.

Domain and Rusnano are leading a group that is pouring an additional $20 million into San Diego-based CoDa Therapeutics, along with GBS Ventures of Melbourne, Australia, and BioPacific Ventures of Auckland, New Zealand, who previously invested in the company with Domain. The new Domain/Rusnano partnership was designed to do things just like this, providing funds for Domain portfolio companies like CoDa, while also building up infrastructure for biotech in Russia. The new shot of cash will be used to help CoDa run clinical trials in the U.S. and Russia with an experimental drug for wound healing, which it calls Nexagon. The plan is for those trials to serve as the basis of regulatory approvals around the world, including in Russia, by 2016, Domain and Rusnano said in a statement.

“We are pleased that CoDa Therapeutics has been selected as the first strategic investment of the Domain Associates/RUSNANO partnership,” said Brian Dovey, a partner at Domain, in a statement. “This unique and significant fund will enable many promising therapeutic technologies under development by Domain portfolio companies to come to market sooner than might otherwise have been possible.”

Domain's Brian Dovey

CoDa was founded in 2005. It previously raised $20 million in a two-part Series A venture round that closed in February 2007, plus $19 million in the first installment of a Series B financing in April 2011 and a $6 million loan in October. The company’s lead drug candidate is a topical agent designed to stop overproduction of a protein called connexin43 that is thought to be a bad actor in chronic, poorly healing wounds. CoDa’s plan is to develop the compound for venous leg wounds and for diabetic patients with foot ulcers. CoDa says that more than 500,000 patients in the U.S. suffer from venous leg ulcers each year, which adds up to 2 million lost work days and about $3 billion in treatment costs as some wounds take as long as a year to heal.

The investment agreement calls for Rusnano to invest on a 50-50 basis with Domain and its venture partners in roughly 20 U.S. life sciences companies developing a host of new drugs, medical devices, and diagnostic technologies. The deal is interesting partly because the Russian group is a relatively new and aggressive investor in life sciences, at a time when U.S. venture firms are cutting back on life sciences investment.