Light Sciences Oncology, a quiet Snoqualmie company fighting some of the most intractable cancers, has persuaded venture capitalists to...

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Light Sciences Oncology, a quiet Snoqualmie company fighting some of the most intractable cancers, has persuaded venture capitalists to make their biggest bet in Washington state since the 2001 recession.

Today, the company expects to complete a $67 million financing, a major vote of confidence in its experimental technology for fighting cancer with a drug and a tiny wand of light.

It’s the largest single venture-capital investment in a Washington company since the economic downturn of 2001, and the third-largest venture round for any U.S. biopharmaceutical company so far this year, according to figures from Dow Jones VentureOne and Ernst & Young.

The investment, raised in two chunks this fall, will allow Light Sciences Oncology to speed development of a potential outpatient treatment for solid tumors such as liver cancer, for which there are few successful therapies.

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With the company’s Light Infusion Technology (Litx), patients receive a drug intravenously. Then a thin strand of red, light-emitting diodes is inserted into the center of the tumor using something resembling a biopsy needle.

“The light doesn’t do anything, and the drug doesn’t do anything,” said Chief Executive Dr. Llew Keltner. “Only when you’ve got the right concentration of drug and the right amount of light over the right period of time is there any effect on the tumor.”

The reaction between the light and the drug only occurs in the area where the needle is inserted, not elsewhere in the body, so side effects in clinical trials thus far have been minimal.

The company plans to start three advanced clinical trials of Litx next year, Keltner said, but even if those are successful, the treatment won’t be available until 2008 at the earliest.

The funds raised this fall will be enough to complete the first advanced trial, slated for clinical sites in Asia exclusively and focusing on patients with liver cancer. The other two trials will study Litx in rare brain tumors and colorectal cancer that has spread to the liver.

Eventually, Light Sciences Oncology thinks the treatment could be used in up to 80 percent of solid tumors, which would be a huge market opportunity.

“It’s literally many tens of billions of dollars,” Keltner said.

The company is testing Litx against some of the deadliest forms of cancer with limited treatment options.

In the United States this year, there will be an estimated 17,500 new cases of liver cancer, and 15,200 people will die from the disease. The cancer is on the rise in North America, but is much more prevalent in other places, such as Asia, said Dr. Raymond Yeung, director of the Liver Tumor Clinic at the University of Washington Medical Center.

“It is one of the most common causes of cancer death in the world,” he said, adding that liver transplant is the best treatment available now.

About 145,300 Americans will be diagnosed with colorectal cancer in 2005, and 56,300 will die. Yeung said it’s difficult to treat, especially after it has spread.

He has reviewed the Litx treatment, though he’s not testing it in his clinic, and called it “a very promising technique.”

Light Sciences Oncology is working in a field where many other companies have tried and failed, Keltner said.

“The majority of those companies are either out of business or have moved on to other activities,” he said.

Dr. Craig Taylor, a partner with Adams Street Partners, one of the venture-capital firms invested in Light Sciences Oncology, said the fact the company’s technology was already shown to be effective and safe through smaller clinical trials, made for an attractive investment.

Broadly, he sees “muted optimism” among investors in biotechnology companies that have products in advanced clinical trials. Such companies have seen more interest this year than startup and early-stage companies.

Because venture capitalists can’t count on initial public offerings to cash them out relatively quickly at high prices, they are having to ride investments longer. That’s led them to be more choosy and opt for companies that may also be candidates for purchase or corporate partnership deals.

This week, Light Sciences Oncology is completing the second, $32 million portion of the funding round it began this fall.

Among participants in the financing were the investment arms of pharmaceutical companies Novo Nordisk and Johnson & Johnson. Other investors include Essex Woodlands Health Ventures and the China Development Industrial Bank.

With 22 employees, Light Sciences Oncology was spun out of 10-year-old Light Sciences Corp. in January.

Keltner has been on the road three weeks a month recently to complete the financing, and only last week decorated his Spartan office with pictures of his family.

He may have to hit the road again. Light Sciences expects to raise more money to complete its two other planned clinical trials.

Benjamin J. Romano: 206-464-2149 or bromano@seattletimes.com