Kinex Pharmaceuticals has just finished its largest round of fundraising, a multimillion-dollar infusion that will fuel the Buffalo-based drug-development company’s ambitious plans for global growth.
The 11-year-old biotech company is on a hiring and acquisition binge as it pivots from its historic focus on drug research and development into drug testing and manufacturing in both the United States and Asia. The company is poised to triple its workforce in the coming weeks and is considering a name change to reflect its broader mission and its international expansion.
Kinex has raised $200 million since the company started. Company officials did not reveal the latest amount raised but said that demand for an equity stake in the company was high and that they decided to limit investors to strategic partners, including Ma Huateng, the billionaire founder of a Chinese Internet firm.
Local biotech boosters have long viewed Kinex, located on the Buffalo Niagara Medical Campus, as a potential game-changer for the region’s life sciences economy.
Kinex raised all of its initial financing from local investors, and most of its workforce remains in Buffalo and its suburbs. However, the company has options for its manufacturing push and future hiring and growth may not take place here.
“We are no longer just a New York, or a Western New York, company. We are already having a global outreach,” Dr. Johnson Y.N. Lau, Kinex’s chairman and CEO, said in an interview Monday after the fundraising announcement.
Kinex was started 11 years ago by David G. Hangauer and his co-founders after licensing a technology from Hangauer’s chemistry lab at the University at Buffalo. The company doesn’t have any drugs on the market and has yet to turn a profit, but it does have anti-cancer therapies in development.
The company, for the first seven years of its existence, was funded entirely by a group of about 300 angel investors from the Buffalo area.
That was a crucial source of support because it’s difficult for startups in any industry, but especially in drug development, to raise money in their early years, said Marnie LaVigne, president and CEO of Launch NY, who has worked for years to build the region’s life sciences industry.
Under Lau and Flint D. Besecker, a board member and the company’s chief operating officer, Kinex has taken a global approach to fundraising.
Of the $200 million that Kinex has raised in private capital to fund its costly research and drug-development efforts, $100 million has come in the last 14 months. Most of that recent figure has come from Asian investors, including the latest round of fundraising with Ma in the lead.
The founder of Tencent, the Chinese Internet giant, is known as “Pony Ma” and will serve on Kinex’s Asia Business Council of Advisors. Forbes estimates that Ma is worth nearly $20 billion, and Time magazine last year named him one of the world’s 100 most influential people.
“The Kinex leadership team and its platform strategy are very forward thinking and unique on a global scale. Advances in their proprietary medical technology will enable patient access to cutting-edge technologies and care, which will significantly improve the lives of many people around the world,” Ma said in a statement.
The recent fundraising has supported a hiring and buying spree for the biotech company, which has about 80 employees worldwide, including 55 to 60 in Buffalo and its suburbs.
The company is ramping up its drugmaking capacity by acquiring existing drug manufacturing companies or by building from scratch its own manufacturing platforms, Besecker said.
Kinex jump-started that campaign by buying QuaDPharma, the contract drug testing and manufacturing firm based in Newstead, a deal the companies announced last September. Kinex will seek out drugs to manufacture through its own inventions, mergers and acquisitions, licenses or joint ventures.
“Our expansion strategy is really a big deal. It’s a big deal for both China and the U.S. So that, in itself, is going to enable us to optimize the opportunities we see across both the continents,” Besecker said in an interview.
To reflect that expanded business mission, company officials are weighing changing the name from Kinex, a reference to the anti-cancer compounds, known as protein kinase inhibitors, synthesized by the company’s researchers.
The company aims to boost its employment from 80 to 240 employees in a matter of weeks, and to 800 employees in the next two years, through a combination of hiring and acquisitions, according to Besecker and Lau, who declined to provide further details Monday.
Buffalo has remained a hub for Kinex even as the company has expanded to locations in New Jersey, Hong Kong, Taiwan and China. To highlight this area’s importance to the company, Kinex is inviting much of its global workforce to a meeting early next month in Buffalo, Lau said.
However, future manufacturing and hiring won’t necessarily take place in Buffalo or New York. “The takeaway is we’re doing it, the question is where,” Besecker said.
That’s a challenge for any maturing startup company in a global economy, Launch NY’s LaVigne said.
“I think what Buffalo needs to do, and New York State as a whole, is to keep in mind, ‘How do we continue to keep our edge?’ ” she said
“We do have assets that really can’t be matched elsewhere. But let’s be mindful of that and understand that, for a business to survive, it actually makes more sense oftentimes to locate some of the pieces elsewhere.”
Kinex has been in talks with state officials for months over what incentives are available to support an expansion of the company’s operations in New York.
Company officials declined to offer details on the state of the discussions, and Empire State Development representatives declined to comment for this article.