HALIFAX - Chitogenics Ltd., a medical device and delivery company specializing in biomaterial devices, today announced the completion of a $2.475-million round of financing. Participating investors are Nova Scotia Business Inc., BDC Venture Capital, a division of the Business Development Bank of Canada, InNOVAcorp, and the company's founders.
The announcement marks the first investment in Chitogenics by Nova Scotia Business Inc., whose investment is in the form of a $1-million convertible debenture. This round of financing for the company also includes $700,000 from BDC Venture Capital, $475,000 from company management, and $300,000 from InNOVAcorp. Chitogenics will immediately begin efforts to raise a new $12-million equity round for further product research and development.
We are very pleased to have secured this round of financing as these funds will ensure that our progress is continued until we raise the next private placement, said Marina Zazanis, president and CEO of Chitogenics. We expect to begin Phase III clinical trials in the third quarter of 2002 for our gynecological anti-adhesion product. It is our goal to demonstrate that our product is safe and efficacious and, as a result, will be commercially viable.
Chitogenics was created in 1993 as the result of the merger of Neogenix Inc. of New Jersey and Nova Chem of Halifax. Its platform technology, NOCC (N,O-carboxymethylchitosan), is based on the natural biopolymer chitin, derived from the exoskeleton of shrimp. Chitogenics initial focus is to provide a solution to what is widely regarded as one of the greatest unmet surgical needs today: the reduction of post-surgical adhesions. A leading medical complication, post-surgical adhesions can cause pain, infertility, bowel obstruction, restriction of motion, repeat cardiac surgical procedures and mortality. The company's product, a gel, is aimed at keeping apart adjoining tissue that should heal separately after surgery.
NOCC is also being tested for use in a number of other applications, such as sustained drug delivery, wound management products, osteoarthritis and other surgical aids.
Stephen Lund, president and CEO of Nova Scotia Business Inc., said the decision by the business development agency to invest in a biomedical company like Chitogenics reflects a strategic focus on the life sciences sector, one of the key growth areas for Nova Scotia. Chitogenics is at the forefront of exciting biomedical advances, with strong management and a world-class scientific advisory board. Nova Scotia Business Inc. is proud to be associated with such an innovative company.
Last year, Chitogenics completed its Gynecological Phase I/II clinical trial on a product used to reduce post-surgical adhesions. The latest investment will fund the company's operation while it prepares for Phase III clinical trials. In addition, pre-clinical studies for two other adhesion prevention products (abdominal and cardiac) have begun.
Gregory Phipps, director of Venture Capital for BDC, added, BDC Venture Capital has supported Chitogenics through ongoing investment since 1998 and anticipates further support as the company continues to meet important milestones and achieves its commercialization goals. We are confident that Chitogenics will become known as one of the greatest VC-backed success stories in Atlantic Canada.
Recently the company, which has facilities in Dartmouth, N.S., and Chatham, N.J., won the Best Life Sciences/Healthcare Company award at the third annual New Jersey Venture Fair. The fair showcased 53 high-tech, high-growth companies from throughout New Jersey, Pennsylvania and New York.
InNOVAcorp CEO Ross McCurdy explained his organization has been a partner with Chitogenics since its creation. We are proud of Chitogenics accomplishments and look forward to it becoming one of Canada's most successful life sciences companies.
Chitogenics earlier rounds of financing include more than $15.1 million from the company's founders and other sources, including $4.5 million from the Business Development Bank, Working Ventures Canadian Fund Inc. and InNOVAcorp.