Nov 12, 2003

Anesthetics Developer Zars Caps a $5M Series B Round

Zars, a pharmaceutical company that develops and markets products for pain, anxiety disorders, and nausea, said it has raised $5 million in its Series B round of financing.

Zars, a pharmaceutical company that develops and markets products for pain, anxiety disorders, and nausea, said it has raised $5 million in its Series B round of financing.

New investor Zions SBIC co-led the round along with existing investor, Wasatch Venture Funds. Cephalon -- one of Zars partners -- and several new and existing private investors, including members of Tenex, joined the round. Zions SBIC invested $2 million, Wasatch Venture Fund put in slightly less than $2 million, and Cephalon invested $1 million.

Larry Rigby, Zars' president and chief executive officer, told VentureWire that the company's valuation rose by 20%. The funds are expected to last until the company becomes cash-flow positive, which is expected to happen in November 2004.

Mr. Rigby said the company would use the proceeds for the clinical development of the company's pipeline of products. In March, Zars filed its first new drug application (NDA) for an anesthetic patch. Zars expects to receive FDA approval for the patch in February or March. Zars' second NDA for a cream product with similar anesthetic compounds will be filed next week. Mr. Rigby said the cream is intended for use on larger surface areas like the face.

The company began raising funds for the round in April. Mr. Rigby said, "We originally went out to raise more than $5 million but, in the mean time, we entered into two new collaborative partnerships with big pharmaceutical companies." These partnerships, along with the existing partnerships with Johnson & Johnson and Cephalon, are expected to bring in a total of $130 million over the next three to four years. Ferndale Laboratories recently agreed to manufacture and market the Zars patch. Zars' fourth partner has not yet been disclosed.

Zars, which is based in Salt Lake City, has raised approximately $20 million in private equity since its founding as a technology transfer from the University of Utah in 1998. Wasatch Venture Fund led the $6.3-million Series A round, which closed a year and a half ago. Zars currently has 27 employees, but Mr. Rigby said they would be adding another 13 within two years.