On-Q-ity, which announced a $21 million Series A round today, is a combination of two other Mohr Davidow companies — CELLective Diagnostics and The DNA Repair Company — that would have languished and probably died had their investors and scientists not figured out a way to keep their technology alive, said Mohr Davidow’s Sue Siegel.
Both companies had the misfortune of looking for a Series B round in the summer of 2008 — a slow season to begin with — and then getting hit with the global financial collapse that followed.
“They found themselves not able to raise a financing, not because of the merits of the technology, but because of the environment and the circumstances that existed,” Siegel said. “Many companies didn’t get financing, and you’ll find a graveyard of companies where either the technology was shelved or it got delayed or they’re subsisting on minimal dollars until they see another day.”
The idea of combining the companies came from the scientists at DNA Repair — who saw a technical fit with CELLective– from Siegel and a couple of other Mohr Davidow partners, and from Mara Aspinall, who was brought into CELLective by Mohr Davidow from Genzyme Genetics in early 2009 to figure out what to do with CELLective and saw the opportunity to merge. She’s now the CEO of On-Q-ity.
With the two technologies, On-Q-ity has a shot at developing new, cheaper and more effective treatments for cancer by tracking suspicious cells in a patient’s blood stream that indicate resistance to treatment, Aspinall said. On-Q-ity will focus on breast and thoracic cancers first, then prostate and other solid tumor cancers.
“This allows us to do a lot less invasive testing with a very simple blood draw that may well be done on a regular basis for other reasons,” Aspinall said. “We can educate patients to be much more familiar with the intricacies of their care, and there’s the ability to guide a treatment regimen using all the available drugs. Doctors and patients can choose the best one.”
On-Q-ity is in large-scale clinical trials and expects to have tests in the market by 2011.
Getting the combined companies funded as On-Q-ity was as hard as getting a new company funded from scratch, even though Mohr Davidow was involved in all of them, Siegel said. She does not suggest it as the easy way out for venture firms with languishing portfolio companies — all the usual due diligence had to be done, and other Mohr Davidow partners had to be convinced.
“After as much work as we did, this one feels good, but it does take a tremendous amount of heaving and hoeing,” she said.
Still, it got done. Bessemer, Physic Ventures and Northgate Capital also participated in the round, and Siegel, Steve Kraus from Bessemer and Dion Madsen from Physic are on On-Q-ity’s board.