Kansas City Business Journal - by Mike Sherry Staff Writer
- Jan. 15, 2010

Two local biotech entrepreneurs plan to use a cutting-edge business approach to replicate their previous success.

Novita Therapeutics LLC is a new venture by Dr. Nicholas Franano and his father-in-law, William Whitaker. The company will look to develop drugs and medical devices to treat cardiovascular, renal and gastrointestinal diseases, in keeping with Franano's training as an interventional radiologist.

The two were the founders of Proteon Therapeutics Inc., which is developing a blood vessel-dilating drug that could help establish and maintain access points for dialysis patients. Proteon, now based in Waltham, Mass., negotiated a deal with Novartis AG in March that gives the Swiss company an option to buy Proteon for more than $550 million. The sale could go through in 2012, pending results from the phase 2 clinical trial of Proteon's lead product candidate.

Franano and Whitaker left full-time employment at Proteon on Oct. 31, though they remain consultants and Franano is a board member.

Plans call for Novita to be an "innovation engine," moving its most promising discoveries into separate companies to give them the "singular focus that they need" to further their development.

Too often, Franano said, "once a small company gets a really good product, then all of the money and energy and time gets focused on the lead product, and that hampers innovation."
A handful of companies in biotech hotbeds on the East and West coasts are using the business model Novita is adopting, said Lesa Mitchell, vice president for advancing innovation at the Ewing Marion Kauffman Foundation.

But the approach is not prevalent in the Midwest, she said, adding that "it's too early to tell if we can absolutely bet on this model."

One local official rooting for Novita is Tom Thornton, CEO of the Kansas Bioscience Authority.
He said Novita and the new companies it might spawn fit with a new program in which the KBA is investing $50 million with eight venture capital firms that are focused on building biotech companies in the state.

Novita, he said, has the potential to be "the generator of high-quality, investable deal flow that I think those funds ultimately are going to get excited about."

Investors would have the option of converting some, none or all of their interest in Novita into preferred stock in one or more spinoff companies.

Franano and Whitaker said they hope to raise as much as $3 million for Novita this year and eventually create a new company every 12 to 18 months.

Initial financing for Novita came from the founders and a round of angel investing that closed in November.

Franano and Whitaker are in the market for an existing building of as much as 15,000 square feet to convert into a headquarters. They intend to locate in Kansas because of the incentives and programs available to biotech companies.