Jul. 9–Local biomedical start-ups seem to be luring investors again.

And this is happening despite a weak economy and slower-than-expected progress in delivering two new sources of public financing to the region’s life sciences industry.

In recent weeks, at least five local ventures — Fluorous Technologies, Renal Solutions, A-Lung Technologies Inc. and two of LaunchCyte Inc.’s ventures, Chrystalplex Corp. and Immunetrics — have raised capital, with the biggest haul, some $16.7 million, going to Renal Solutions.

Industry executives as well as some venture capitalists say the spate of activity is due to the perceived quality of the companies that raised the funds.

But most also agree the flurry of deals suggests that the near-freeze that occurred in life sciences investing after the dot.com collapse might be ending.

“My hunch is [the activity in the region] is more than anecdotal,” said Tom Petzinger, LauchCyte’s chief executive officer. The climate for life sciences investors “is still cool, but it’s definitely thawing.”

Just as the collapse of the stock market clobbered private venture capital markets, recent rallies are likely helping turn the private investing climate around, Petzinger and others said.

More important, the surge in biotech stocks can’t help but be heartening to venture capitalists prospecting life sciences investments. The AMEX Biotech Index, a widely watched barometer, has risen more than 40 percent since the beginning of March and is up more than 80 percent from its 52-week low.

“One does get the impression that there is something broader going on in the market … that perhaps we’ve turned the corner,” said Fluorous chief executive Philip Yeske.

Yeske and others, however, cautioned that there was no easy money in the market and that venture capital is likely to remain much more disciplined for the foreseeable future than it was before the stock market bubble broke.

“There has to be the right technology, the right market, the right management team,” said Renal Solutions’ Chief Executive Officer Peter DeComo. There also is much more “due diligence” on the part of prospective investors, he said.

Nonetheless, Renal’s deal — in part because of its size — along with the other recent financing rounds, has helped increase recognition of opportunities in the region on the part of venture capitalists elsewhere, local executives said.

Sean Sebastian, a partner in Birchmere Ventures, which led the financing for Renal, said he heard yesterday from one, on the West Coast, that expressed interest in doing business here.

Fluorous CEO Yeske said the news release his company sent out nationally to announce $3 million in new financing, raised largely among individuals, resulted in a flurry of e-mails from venture capitalists elsewhere.

“I was actually quite surprised at the attention it received,” he said, adding that his sense is “that we’re on the radar.”

“Time will tell whether that results in more deals and more capital being invested in Western Pennsylvania.”

The apparent easing of private funds is important because rumors at the beginning of the year suggested that it would be difficult for some companies to hold out much longer without an infusion.

Numerous fledgling firms had undergone layoffs and at least one, Demegen Inc., a small drug discovery company, told the federal Securities & Exchange Commission, its survival was in doubt.

At the time, some were counting on help from public funds, including those earmarked from the state’s share of the federal tobacco litigation settlement and money earmarked by the Greenhouse.

The state, however, has yet to choose a venture capital firm in this part of the state to manage a share of the tobacco funds, and the Greenhouse hasn’t concluded negotiations with a private partner.

The Greenhouse money remains especially important because it is to be targeted at “pre-seed” investments, for ventures at their earliest stage of development.

Said Petzinger at LaunchCyte, “I would say the most acute need in the region is the pre-seed fund.”

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