Innova Inc. picks arGentis Pharmaceuticals for first investment

The Commercial Appeal
April 21, 2008
By Daniel Connolly

Innova Inc., a new venture capital fund that’s targeting small companies in science and technology, announced today that it has chosen Memphis-based drug startup arGentis Pharmaceuticals LLC for its first investment ever.

Innova didn’t announce the size of its investment, but arGentis CEO Tom Davis said the firm has raised a total of nearly $2 million from Innova and unnamed individual investors.

Ken Woody, the head of Innova, will have a seat on the arGentis board.

“It basically positions us for our next stage of developing our technology, and we get Ken on the board, which is really good,” Davis said.

The money will help arGentis advance its experimental drug treatments for dry eyes and scleroderma, a rare and often deadly disease.

The investment also means arGentis will be able to hire six to 12 more people in the short term to run a small facility that will perfect techniques for making the purified cow collagen that it needs for the scleroderma treatment, Davis said.

If the treatment wins federal approval, the firm would build a larger facility that could employ as many as 100, Davis said. The firm currently has only three people, including Davis.

The investment is significant because it represents a larger effort to build up science-based businesses in Memphis as a means to create high-paying jobs and improve the area’s standard of living.

“I think what you’re going to find is Innova is going to seed a whole lot of entrepreneurship in this community,” said Steve Bares, head of the Memphis Bioworks Foundation, a non-profit that plays a lead role in promoting science-based businesses.

Innova was born last year out of a long-standing need for an investment fund to back early, high-risk companies, Bares said.

It has $11.55 million over five years from the economic development arm of the Memphis Fast Forward initiative. The money comes from from businesses and government entities.

Woody, a former sales executive for medical device maker Smith & Nephew, has office space within the Bioworks building at 20 South Dudley, at the site of the old Baptist Memorial Hospital in Downtown.

Woody’s office is on the eighth floor. So is the office of arGentis.

Woody said that almost as soon as he started his new job in November, arGentis leaders came down the hall and urged him to invest.

Woody said he’s seen dozens of potential deals but picked arGentis as his first investment because it controls intellectual property developed at the Southern College of Optometry and the University of Tennessee Health Science Center, because it has strong ties to Memphis, and because it’s an early-stage company with a lot of potential.

Woody said Innova may still invest in Genome Explorations, the Memphis firm featured in a Sunday Commercial Appeal article on venture capital, but said he and his colleagues haven’t made a decision yet.

Innova has already signed an agreement to invest in a second company but can’t announce it immediately for legal reasons, Woody said. He said the firm will likely invest in a total of four companies by the end of the year.