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Groove Raises $6M to Fund Operations Through 2012

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By Doug Macron

Groove Biopharma announced this week that it has closed a $6 million Series B round of financing, giving the company enough funds to operate through 2012.

With the additional capital, Groove is also planning to modestly increase its headcount in order to meet its goal of selecting a lead candidate for investigational new drug application-enabling studies by the end of next year, according to company officials.

Groove was founded in 2008 by investment firm Accelerator to develop microRNA inhibitors based on minor groove binders. Essentially peptide antibiotics that non-covalently bind to the minor grooves of nucleic acid duplexes, MGBs showed the potential to boost the efficacy of miRNA antagonists. Accelerator picked up the technology's rights for miRNA drug applications from Nanogen.

Groove changed its name from Mirina earlier this year after a copyright dispute with Marina Biotech (GSN 6/23/2011).

Groove had been aiming to complete the Series B since this summer, and did so using Accelerator's existing network of investors, which provided the company with its initial Series A financing in 2010. These investors include Alexandria Venture Investments, Arch Venture Partners, OVP Venture Partners, Versant Ventures, and WRF Capital.

Despite the added capital, however, Groove aims to “stay as lean as possible for as long as possible,” according to CSO David McElligott.

With its five current employees, “we have the minimal number of staff needed to do our work internally,” he said. “We outsource a lot … and will continue to do that.” Still, McElligott noted that Groove expects to add a “small number of staff” in the next year to prepare for IND-enabling studies.

In addition, the company will continue to be housed within Accelerator for the foreseeable future, a move that eliminates the need to hire “business-oriented personnel,” Accelerator President and CBO David Schubert told Gene Silencing News. “All of the business operations are taken care of by Accelerator … [which] allows Groove to utilize all of its funding in pushing forward its science.”

Groove is eyeing a number of different disease areas in which to apply its technology, and while Schubert indicated earlier this year that the company's first clinical candidate would likely be in oncology, he stressed this week that the firm is also exploring fibrosis, infectious diseases, and hematological disorders.

While oncology is “a big area” for miRNA therapeutics and represents a “significant market opportunity,” other indications may offer a shorter and less expensive route to the clinic and onto the market, he noted.

Once Groove has decided upon its first drug candidate and prepares to begin IND-enabling work, it is expected to once again require an infusion of capital, but just how it obtains this new financing is not yet clear.

McElligott said that partnerships with bigger industry players are an “attractive” possibility, especially because of the non-dilutive funding they bring in, and noted that Groove has already struck a number of deals with unnamed companies to evaluate its MGB technology in advance of a larger partnering arrangement.

At the same time, Accelerator's investor syndicate has been “incredibly supportive … [and] could carry this company into another much larger round that would be able to get [us] to what we believe would be a phase IIa or [IIb] inflection point,” he said.

“We see the landscape fairly wide open.”


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