Thursday, March 14, 2013

CMEA 8 Is "Dissolved"

Hark back to the golden days of JP Morgan, all of two months ago. The sun was shining, the cable cars were whirring, and CMEA Capital was touting its long-awaited CMEA 8 fund. It even had posted Web pages for two new partners, who were bellying up to the table with a lot of optimism about the new fund and a string of early-stage biotech successes on their resum├ęs. We wrote about it here.

Two months later, the fund's plug has been pulled, according to all three partners involved. In response to inquiries, Troy Wilson, the cofounder of PI3 kinase developer Intellikine, Kent Hawryluk, an Indianapolis-based VC, and CMEA life sciences managing director Karl Handelsman issued a joint statement to our sister publication START-UP: “CMEA 8 is dissolved. The decision was mutual and we have amicably parted ways.”

CMEA has had on-again, off-again plans for this fund, going back to 2010 when it was pitching prospective investors on an asset-centric biotech fund, backed in part by Eli Lilly and code-named "Velocity." START-UP wrote about those plans here.

In 2011, CMEA jettisoned plans for Velocity as a standalone fund -- around the same time managing general partner Jim Watson said there would be no eighth fund -- instead carving Velocity out of CMEA VII and making it one of many VC experiments that, in the past couple years, have prioritized lean-and-mean development of in-licensed compounds. (In its current incarnation, Velocity's tag line is "We build drugs, not companies.")

We shouldn't go any further without mentioning the elephant in the room: the sexual harassment suit against CMEA and one of its former executives that went public March 7. Let's be clear: there is no indication that the unraveling of CMEA 8 is linked to the lawsuit, and the two new would-be partners, Wilson and Hawryluk -- no longer listed on CMEA’s Web site, by the way -- are not mentioned in the legal complaint.

After the suit became public (you can find more details and the full text of it here), Wilson, Hawryluk and Handelsman would make no comment except for the statement previously noted.

So what's next? Handelsman referred all inquiries about the lawsuit to CMEA’s lawyer, Lara Villareal-Hutner, who responded with a prepared statement that other media outlets have also received in recent days. It read, in part: “CMEA acted at all times professionally and with integrity, underscored by the fact that for the last eight months the administrative assistants continued working for the Firm, and resigned only after retaining an attorney and filing this lawsuit. While the statements asserted in this lawsuit are salacious, CMEA is confident that the true facts supported by evidence - not others' self-interested mudslinging - will determine the outcome of this case. As such, CMEA is fully prepared to vigorously defend itself and its reputation, and is supremely confident in its ability to prevail.”

Reached in Indianapolis, Hawryluk declined to comment. Meanwhile, Wilson has been busy building, with the help of his former Intellikine colleagues, a self-described “drug discovery incubator” called Wellspring Biosciences, a variation on the increasingly common theme of asset-centric biotech company creation. We noted Wellspring's first deal -- the spinout and partnership of its offshoot Araxes Pharma -- in the March 4 Deals of The Week column. On Wilson’s now-defunct CMEA page, he’s quoted as saying that Wellspring is “exactly the sort of company we want in CMEA 8.”

 We'll have a full report on all these doings in the upcoming START-UP.

Photo courtesy of flickr user Eschipul.

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