After incubation for two years at the Australian National University and the Genomics Institute of Novartis Research Corp., Phenomix raised $12 million in its first round of funding, and has an option to draw on another $20 million from investors in the “forward genetics” company.

Privately held Phenomix, of San Diego, is being led at the moment by Steve Kay, chief technical officer and president, until a CEO is selected. Kay is the former director of discovery research at the Genomics Institute in San Diego.

The genetics department at the Baylor College of Medicine in Houston joined the Genomics Institute and the Medical Genome Center of the John Curtin School of Medical Research at the Australian National University in Canberra to form Phenomix.

“The current $12 million will last us up to two years,” Kay said, but noted that depending on how the company decides to accelerate its internal research programs, it would expect to access another $10 million in the next year or so.

Kay said he first went out on the road in August to address potential investors.

“Essentially, we used the founding board to make contact with the venture community,” Kay said, noting that the company “ended up being quite substantially oversubscribed” before closing in mid-February.

Phenomix will take advantage of the “substantial” intellectual property and technological capability that’s being transferred into the company from its three founding institutions, Kay said.

“We’ve gotten a massive jump-start, and what this company is going to do is to solve the major problem of the moment in drug discovery, which is that drug pipelines are flooded with potential targets that have been revealed by the Human Genome Project,” Kay said. “Classical genomics tends to leave those potential drug targets very weakly profiled there are lots and lots of targets with very little information associated with them.”

Phenomix will conduct its discovery research by starting first with a physiological model of the human disease of interest and then identifying and validating the genes or drug targets involved in that disease. Using mouse models of human disease, Phenomix will assign functions “to many hundreds of potential drug targets,” Kay said.

Kay said Phenomix would do this through a combination of its own internal research programs, which will involve the cloning of novel drug targets that have been validated by the animal model from which they came, and partnerships.

“Some therapeutic areas have a registration path that favors partnerships with large pharmaceutical companies, so in addition to our internal research we expect to have collaborations with large pharmaceutical companies both in target validation and compound development,” Kay said, noting that the company already is engaged in “advanced level” discussions with several potential pharmaceutical partners.

Sofinnova Ventures and Alta Partners, both of San Francisco, co-led the investment round. Joining the round were Bay City Capital, of San Francisco; CM Capital Investments, of Brisbane, Australia; CMEA Ventures, of San Francisco; Novartis Bioventure Fund, of La Jolla, Calif.; Rothschild Bioscience Managers Ltd., of Melbourne, Australia; and Versant Ventures, of Menlo Park, Calif., among others.