Novartis to Invest Up to $670m in Quark Biotech

Drug giant wants share of Israeli startup's products

The multinational drug company Novartis is planning to invest up to $670 million in Quark Pharmaceuticals.

Larry Ellison

Quark, a biotech firm based in Fremont, California, has its research and development headquarters in Nes Tziona.

Novartis will initially invest $10 million in Quark, and will invest more depending on whether the company meets benchmarks.

Quark is also planning to float $50 million in shares on the Nasdaq stock exchange, at a company valuation of $300 million.

If market conditions are not conducive for such an offering, it will be made on the Tel Aviv Stock Exchange. The company has not yet submitted a shelf prospectus to the U.S. Securities and Exchange Commission.

Quark had planned to raise $60 million to $70 million in a public offering in 2007, but backed off due to weak demand. It then tried to carry out another stock offering at $12 to $14 a share, but again canceled due to weak demand in the United States.

The company is thought to have received $130 million to $150 million in investments.

Quark, which is also known as QBI, develops RNAi-based drugs. In partnership with Pfizer Pharmaceutical it is developing RTP801i-14, a drug to treat age-related wet macular deterioration, which the company says is the leading cause of blindness in the developed world, affecting more than 15 million people over 50 in the United States alone. The medication is also intended to treat diabetic macular edema, an abnormal accumulation of fluid in the eye.

It is also developing a product, AKIi-5, designed to prevent acute kidney injury during heart surgery as well as products to treat hearing loss and lung obstructions.

Quark's major investor is Larry Ellison, founder of the U.S. software company Oracle. Through his investment fund Tako Ventures, Ellison holds more than 42% of Quark. Other shareholders include the Trans-Science Global Bio-Technology Fund of Japan, with a 10% stake, and the Japanese investment firm Asuka DBJ Investment with 7%. Quark CEO Daniel Zurr holds 13% of his company's stock.