Idun to Get $22.8-Million Backing

Idun Pharmaceuticals, a San Diego biotechnology company co-founded by Nobel laureate H. Robert Horvitz, on Monday closed a private financing deal that will allow it to begin testing a liver disease medication based on the scientist’s discovery.

Idun said it raised $22.8 million from a syndicate of investors led by Ventana Capital Management, an amount slightly less than the $28 million raised by all San Diego biotech firms in the third quarter in a tough venture capital environment.

To nail the deal, Idun accepted terms that value the company at one-tenth the amount it commanded in 1999 during rosier times for biotech. Four members of the investment syndicate, which now controls 51% of Idun, took seats on the company’s seven-member board.

Chief Executive Steven J. Mento said Idun will begin human tests of a pill designed to prevent the death of liver cells in hepatitis B patients. The experimental medication leverages on Horvitz’s breakthrough discovery of the “cell death” gene for which he won this year’s Nobel Prize in medicine.

Horvitz, a scientist at Massachusetts Institute of Technology, discovered a gene that, when activated, commands cells to commit suicide. Idun’s experimental drug is supposed to keep liver cells alive by preventing them from throwing the cell suicide switch. The drug will need many years of testing before anyone knows whether it works safely in patients.

Elliot Parks, a managing director of Ventana Capital, also of San Diego, said investors liked Idun’s strong patent position on cell death technology, but required control of the firm. “This is a recapitalization,” said Parks, who joined the company’s board.

As a result of the deal, Idun has received $100 million in outside funds since its inception, with $38 million from venture capitalists and the remainder from such pharmaceutical partners as Novartis, which ended a collaboration in 1998.