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NOVALAR PHARMACEUTICALS INC.

President and CEO: Donna Janson.

Financial information: Would not disclose.

No. of local employees: 12.

Investors: New Enterprise Associates, Domain Associates L.L.C., SR One and Montreux Equity Partners.

Headquarters: Carmel Valley.

Year founded: 2000.

Company description: The privately held dental specialty pharmaceutical company developed an FDA-approved injection drug to rapidly reverse lingering lip and tongue numbness that results from local dental anesthesia.

After finding a buyer for its only product, local dental biotech company Novalar Pharmaceuticals Inc. will cease operations at the end of the month.

The Carmel Valley company said March 18 that it had entered into an agreement to sell its OraVerse injection drug to major dental pharmaceutical company Septodont, based in Lancaster, Pa.

Septodont, which manufactures OraVerse, will take over sales, marketing and regulatory responsibilities of the product, Novalar said in a statement. Financial terms of the deal were not disclosed, but Novalar said Septodont will make an upfront payment to the company and its investors, in addition to milestones and royalties on sales of the product, which has been approved by the U.S. Food and Drug Administration.

Privately held Novalar has 12 employees mainly senior executives and inside sales staff. Thats down from a peak of about 40 employees in 2009, when OraVerse was launched commercially, said company spokeswoman Carin Canale-Theakston.

Novalar President and Chief Executive Officer Donna Janson said: We are extremely pleased that Septodont has acquired OraVerse. It was really wonderful to be able to hand it over so nicely to someone who has been involved with OraVerse for as long as we have.

OraVerse is the first local anesthesia reversal agent in the U.S., and was named to the Top 100 Products of the year in 2010 and 2009 by dental industry magazine Dentistry Today.

Very few small companies like Novalar ever get a product over the finish line, Canale-Theakston said, so this should be considered a major accomplishment.

Novalars founder, Eckard Weber, did not return calls seeking comment on the deal. He started the company in 2000 after a simple conversation with his dentist about the need to reverse local dental anesthesia.

Since 2001, Weber has been a partner in the San Diego office of Domain Associates L.L.C., a venture capital firm that focuses on life sciences and funded Novalar.

Returning the Patents

Novalar had only one other product in the pipeline.

The company held patents for a therapy known as NV-201, which delivers an antibiotic directly into the root canal to reduce bacteria associated with pain.

I still think that NV-201 has excellent potential, Janson said. The delivery of antibiotics locally has a future.

However, she said the product didnt fit in with the portfolio or manufacturing capabilities at Septodont, which specializes in pain management and restorative dentistry.

Canale-Theakston said Novalar will be returning the preclinical product and patents to the licensors, The Forsyth Institute and Harvard University.

Novalar entered into an agreement to license the patents from those institutions in 2007, but the patents were never in Novalars name, Canale-Theakston said.

Whats Next

The end of Novalar may actually mean brighter futures for other early-stage companies in the San Diego area, said Joseph Panetta, president and CEO of Biocom, an association of life sciences companies in Southern California.

I would consider this a gain, both for the investors of Novalar and for other companies here, Panetta said. I know Donna Janson is a great CEO, and from my conversations with her I know that shes interested in remaining in the community and working in the biotech industry.

Janson said: This is my third startup. I think Im addicted. I just love transitioning companies from the clinical development stage to commercial.

A decade ago, Novalars story could have ended differently, noted John McCamant of The Medical Technology Stock Letter in Berkeley.

Small companies like this are less likely to go to the public market today, McCamant said. Its no longer the age of high-flying IPOs. Theres more caution about whats going on in the industry.

Based on what Novalar has disclosed about the deal, he said he would guess that OraVerse had solid sales and that, in the end, the company did a good job for its private shareholders. It sounds like they made some money.

Kelly Quigley is a freelance writer for the San Diego Business Journal.

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