Networking for New Capital, Partnerships

Celgene Corp., of Warren, and Redpoint Bio Corp., of Ewing, were among the many New Jersey-based companies that staked out multiple conferences organized in recent weeks. These were organized by investment banking firms Rodman & Renshaw and Oppenheimer & Co. in Manhattan, Biotech 2008 in Philadelphia and the American Association for Cancer Research in Cambridge, Mass.

Others are more selective, such as VioQuest Pharmaceuticals of the Basking Ridge section of Bernards, which is preparing for the American Society of Hematology’s annual meeting next month in San Francisco. That event, and the J.P. Morgan Healthcare Conference in January, are among the “must-attend” meetings on a biotech or pharmaceutical executive’s calendar, according to Michael D. Becker, president and chief executive officer of VioQuest.

Eight-year-old VioQuest, which has a couple of cancer drugs in clinical trials but no revenue, is in dire straits, Becker said, as “access to capital is shut off,” though he expects to hit some leads on the conference trail.

Becker is one of two employees left at VioQuest (the other is its chief financial officer) from 11 a year ago, and its market capitalization has steadily plunged, from about $20 million last year to $392,000 earlier this month.

“Most companies in development stages need capital to continue to grow,” said Michael Lacovara, CEO of Rodman & Renshaw, but this year is different because “other sources of financing have dried up.”

The Rodman & Renshaw conference this year had about 300 health care companies among 550 participants, many of which are from New Jersey, Lacovara said. They come to showcase their companies to more than 2,000 investors registered with Rodman & Renshaw, who represent hedge funds, private equity funds and other institutional investors, he added.

Redpoint Bio, a maker of flavor enhancers for the foods and pharmaceutical industries that presented at the Rodman conference, is not looking for investments, but only to tell its story to investors, said its chief financial officer, Scott Horvitz.

“You don’t have the expectation that everybody is going to go out and buy your stock,” Horvitz said. “We are really planting seeds, if you will, so that over time we come on the radar screens of potential investors.” Redpoint Bio has more than $17 million in cash reserves that will last it until mid-2010, and expects to earn revenue of $4 million this year, he added.

Redpoint Bio said it is exploring “strategic alternatives,” including acquisitions and monetizing assets, and has retained life sciences advisory firm Burrill & Co. of San Francisco to advise it.

Getting visibility among investors was the main reason Cantel Medical Corp., a Little Falls-based medical-device maker, participated at the Oppenheimer conference, according to Andrew Krakauer, president. “We are a $250 million company [2008 revenue ending July 31], but we are still not as well known as we would like to be,” he said. Cantel’s products include water purification, filtration and dialysis.

Krakauer says he is not specifically looking to raise money for Cantel at these conferences, but still wants discerning investors to be aware of its prospects. The company participated in the UBS life sciences conference in New York in September, and routinely meets with fund managers and wealth managers, he adds.

Warren Levy, president and CEO of Unigene Labs, a Fairfield-based company that specializes in osteoporosis products, says he finds conferences useful for “introducing new investors to the company story.” He said Unigene participates in three to four conferences each year.

Unigene’s revenue this year is trending with last year’s $20.4 million, and it is “not looking for cash,” Levy says, but these conferences offer “a great opportunity for a lot of companies that are short on cash. There may be no better way to meet” investors.

GPC Biotech, a Princeton company focused on developing cancer drugs, hoped to find potential partners at the Rodman conference as it looks to rebuild its fortunes, said Laurie Doyle, director of investor relations. The company faced setbacks with one of its cancer drugs, but is betting on two other early-stage compounds.

GPC is looking to “either merge or acquire another company, and not looking for any specific amount of money,” Doyle said. The 11-year-old company, which has its global parent in Munich, Germany, earned nearly $4 million in licensing revenue in the first half of this year.

Despite the troubles faced by some companies, the entire industry shouldn’t be painted with one brush, said Bret Holley, a senior biotechnology analyst at Oppenheimer, but the prevailing funding environment “has much more of an impact on small companies in the biotech sector than it has on the larger ones.”