Precision Therapeutics Inc., a South Side-based company developing a test allowing physicians to select the proper chemotherapy to treat cancer, has secured $43 million in new venture-capital funding.
The funding, provided by five previous Precision Therapeutics' venture fund investors, including three from Pittsburgh, and one newcomer will be used to expand the development and commercialization of the test, known as ChemoFx.
"We are excited in being able to raise $43 million, clearly in a very difficult economic environment," said David Heilman, Precision Therapeutics' chief financial officer, in an interview. "We feel this transaction clearly validates our product and the benefits of using ChemoFx."
The $43 million will allow the company to expand its market penetration and pursue new programs "that will further enhance a physician's ability to determine individualized therapy for patients in need," CEO Sean McDonald said in a statement.
Since the company was founded 10 years ago, venture capital raised totals $105 million.
ChemoFx determines how an individual patient's cancer cells will respond to different chemotherapy prior to beginning treatment. Precision Therapeutics maintains using ChemoFx can lead to better outcomes while reducing patient exposure to toxic, ineffective chemotherapy.
The six venture-capital firms that took part in Precision Therapeutics' latest round of funding included Birchmere Ventures, Adams Capital Management and Draper Triangle Ventures, all from Pittsburgh, along with Techno Ventures Management of Boston, and Quaker BioVentures of Philadelphia. The new venture firm investor was Longitude Venture Partners L.P. of Menlo Park, Calif.
"This funding will enable Precision Therapeutics to broaden its educational efforts to physicians who can use this tool to make treatment decisions that have a higher likelihood of success," said Richard Kollender, a partner at Quaker BioVentures, in a statement.
"We're in commercialization, we expect revenues this year will total about $8 million, up from $2.3 million last year," Heilman said. "We currently have about 150 employees, and we're growing, adding outside sales people and inside laboratory people."
Precision Therapeutics is the second Pittsburgh company that McDonald has shepherded to success. Some 18 years ago, he founded Automated Healthcare, based on his idea to place bar codes on medications and to use a robot to retrieve coded medicines.
McDonald sold his company to drug-distribution giant McKesson in 1996 for $65 million. He stayed for five years to continue running the company. Today, the company is known as McKesson Automation.
Today's poor economic climate had a major impact on Precision Therapeutics' future beginning last year. Originally, company executives had planned on an initial public offering, but in November as they prepared to go on the road selling the company's virtues, the market declined, and the stock offering was shelved.
"We then planned to do a reverse merger with Oracle (Healthcare Acquisition Corp.), but the market had no appetite for that type of transaction, either," Heilman said. In April, the company began working on its the latest round of venture capital funding.
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