• October 28, 2009
  • North America

Safeguard Scientifics Leads $17.4 Million Series B Financing for Quinnova PharmaceuticalsPatented Technology Addresses Unmet Need in Dermatology for Enhanced Treatment Compliance and Therapeutic Efficacy

Wayne, PA – October 28, 2009 – Safeguard Scientifics, Inc. (NYSE: SFE), a holding company that builds value in growth-stage life sciences and technology companies, today announced it led a $17.4 million Series B financing round for Quinnova Pharmaceuticals, Inc., with participation from existing investors Thomas, McNerney & Partners and H.I.G. BioVentures. Quinnova will use the proceeds to fund a Phase III clinical trial for an NDA product, expand its sales and marketing capabilities, facilitate the company’s other NDA and medical device clinical trials, and fund research and development initiatives to bring new products to market.

Quinnova is a specialty pharmaceutical company that develops and markets novel topical delivery platforms-based prescription dermatology drugs. The company’s FDA-approved Proderm Technology™ Delivery System (“Proderm”) addresses the need for improved cost-effective treatment options, while simultaneously enhancing efficacy and patient compliance in skin disorders, such as dermatitis, fungal infection, psoriasis and acne. Easily applied and rapidly absorbed, Proderm’s activity is based on its ability to ‘Protect – Repair – Hydrate’ the natural skin barrier. It protects from external irritants by forming an invisible membrane and facilitates the repair of the natural skin barrier by providing essential nourishment to the skin in the form of free fatty acids. Proderm Technology™ is fragrance-free, non-comedogenic, non-alcohol and non-greasy. Quinnova currently has several prescription medications on the market, including its FDA-approved NEOSALUS brand of foam and cream, which are available through dermatologists, podiatrists and pediatricians. Because of its flexibility Proderm presents an excellent platform for future product development in a variety of indications.

“Quinnova is an expansion-stage company that has been generating revenues since 2007,” said James A. Datin, Executive Vice President and Managing Director of the Life Sciences Group at Safeguard Scientifics, who joined Quinnova’s Board of Directors. “A specialty pharmaceutical company with low regulatory risk, growing market penetration and a strong pipeline of products, Quinnova is serving a growing dermatological market that calls for effective, life-long treatments. In addition, Quinnova’s focus on new, improved drug delivery platforms is consistent with the FDA’s initiative to provide cost effective medications that improve patient compliance and reduce the overall cost of healthcare. We’re pleased to add Quinnova to our holdings.”

The U.S. therapeutic dermatology market-encompassing disorders and diseases of the skin, mucous membrane, hair and nails-is presently valued at $6.4 billion annually. It is expected to grow to $8.9 billion by 2013 due to the often chronic nature of skin diseases. Dermatologists and podiatrists are generally dissatisfied with current treatment options citing poor efficacy and low patient compliance.

“Delivery platforms currently available for therapeutic dermatological treatments are frequently not well accepted by doctors or patients,” says Jeffrey S. Day, Founder, President and CEO of Quinnova Pharmaceuticals. “Many topical preparations are poorly appreciated because of local irritation, odor, and challenging application methods, often leaving a greasy residue. Others are alcohol-based, which can sting or dry the skin. Proderm, on the other hand, allows the medication to be absorbed to where it needs to be, while cosmetically appealing to patients. We look forward to working with the team at Safeguard Scientifics to develop and leverage new applications for Proderm.”

About Quinnova Pharmaceuticals, Inc.
Quinnova Pharmaceuticals, Inc. is a specialty pharmaceutical company focused on the development and commercialization of prescription drug products based on innovative topical drug delivery platforms. Founded in 2005 and based in Newtown, PA, Quinnova employs a “Revitalization Strategy” whereby already-proven safe and effective pharmaceutical ingredients are delivered in elegant, unique, patent-protected, customer-friendly delivery systems. This strategy is augmented by the development of medical devices increasing the current portfolio of products. Quinnova focuses on new pharmaceutical products that have a relatively short bench-to­market timeline and a low-development risk profile. Penetration of the US market is accompanied by a growing presence in the international market, mostly through a business development strategy out licensing and utilizing partners to promote Quinnova products. www.quinnova.com.

About Thomas, McNerney & Partners
Thomas, McNerney & Partners is a health care venture capital firm with approximately $600 million under management, focused on investing in life science and medical technology companies at all stages of development. In addition to helping entrepreneurs launch companies with seed and early-stage funding, the firm provides growth capital to emerging companies to advance clinical development or for product commercialization. Thomas, McNerney & Partners also is involved in spinning out products and divisions from major medical device and pharmaceutical companies, consolidating companies through roll-up strategies and participating in structured financings for public companies, as well as recapitalizations. The firm is targeting investments in the pharmaceutical, medical device, biotechnology and diagnostic sectors and in other areas utilizing medical technology innovation. The firm has offices in Stamford, Minneapolis and San Francisco. For more information, visit www.tm-partners.com.

About H.I.G. BioVentures
H.I.G. BioVentures invests in companies developing innovative products for significant unmet medical needs in therapeutics, medical device technology, specialty pharmaceuticals and diagnostics. A natural extension of the broader H.I.G. Capital platform, H.I.G. BioVentures invests across a broad range of stages and leverages its team of seasoned senior investment professionals who have over 75 combined years of experience in life sciences investing, operations, business development, sales and marketing, research management, finance, and technology development. H.I.G. BioVentures benefits from its ability to leverage the broader H.I.G. Capital infrastructure and resources which provide significant value to portfolio companies and partners. H.I.G. BioVentures is the life sciences venture capital affiliate of H.I.G. Capital, a leading global private investment firm with over $7.5 billion of capital under management and U.S. offices in Atlanta, Boston, Miami, New York and San Francisco. For more information, visit www.higbio.com.

About Safeguard Scientifics
Founded in 1953 and based in Wayne, PA, Safeguard Scientifics, Inc. (NYSE: SFE) provides growth capital for entrepreneurial and innovative life sciences and technology companies. Safeguard targets life sciences companies in Molecular and Point-of-Care Diagnostics, Medical Devices, Regenerative Medicine and Specialty Pharmaceuticals, and technology companies in Internet / New Media, Financial Services IT and Healthcare IT with capital requirements of up to $25 million. Safeguard participates in expansion financings, corporate spin-outs, management buyouts, recapitalizations, industry consolidations and early-stage financings.

Forward-looking Statements
Except for the historical information and discussions contained herein, statements contained in this release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Our forward-looking statements are subject to risks and uncertainties. The risks and uncertainties that could cause actual results to differ materially, include, among others, managing rapidly changing technologies, limited access to capital, competition, the ability to attract and retain qualified employees, the ability to execute our strategy, the uncertainty of the future performance of our companies, acquisitions and dispositions of companies, the inability to manage growth, compliance with government regulations and legal liabilities, additional financing requirements, the effect of economic conditions in the business sectors in which our companies operate, and other uncertainties described in the Company’s filings with the Securities and Exchange Commission. Many of these factors are beyond our ability to predict or control. In addition, as a result of these and other factors, our past financial performance should not be relied on as an indication of future performance. The Company does not assume any obligation to update any forward-looking statements or other information contained in this news release.

Theresa Murray, Gregory FCA 610-642-8253 or 732-278-4473