Washington Editor

MacroGenics Inc. has raised $25 million in a Series D-2 financing to fund its cancer stem cell program acquired through its recent acquisition of Raven Biotechnologies Inc. and to further advance the firm's autoimmune, cancer and infectious disease product candidate portfolio.

The Rockville, Md.-based company previously had raised $45 million in May 2006 in a Series C financing.

Before its stock-for-stock acquisition of South San Francisco-based Raven in July, MacroGenics had sufficient cash to take its programs and operations through to at least the end of 2010, and possibly into early 2011, said Chief Financial Officer Jim Karrels.

However, the debt the firm picked up through the Raven acquisition and additional cash burn changed that schedule, he told BioWorld Today.

The Series D-2, however, now "brings us back to that baseline," Karrels said.

The round is called a D-2, he said, because the intended Series D shares were given to Raven investors in exchange for the Raven shares as part of the stock-for-stock transaction. Therefore, Karrels said, the new $25 million raised represents "part two." (See BioWorld Today, July 17, 2008.)

Raven had generated more than 1,300 monoclonal antibodies through its technology platform, including many that target cancer stem cells and cancers of the lung, colon, pancreas, prostate, breast and ovary, Karrels said.

The Raven acquisition, Karrels declared, has "afforded us a wealth of antibody assets."

Using its own FC engineering expertise, MacroGenics is re-engineering Raven's lead cancer stem cell product, RAV-12, which, at the time of the acquisition, was in Phase II development as a therapy for adenocarcinomas - malignant tumors of the epithelial cells that line glands or viscera, he noted.

MacroGenics is close to winding that process down and expects to have the product back in the clinic within the next 18 months, Karrels said.

The new funds also will be used to advance development of MacroGenics' lead product candidate teplizumab (MGA031), a humanized anti-CD3 monoclonal antibody currently in Phase II/III testing as a therapy for Type I diabetes, he noted.

The company last October announced that it had granted exclusive rights to teplizumab to Indianapolis-based Eli Lilly and Co. in a deal that could be worth more than $1 billion to MacroGenics. (See BioWorld Today, Oct. 19, 2007.)

Under the deal, Lilly paid MacroGenics $41 million up front and $3 million in other committed funds, Karrels noted. The biotech also stands to gain $200 million in potential development milestones for the Type I diabetes indication and $250 million in sales milestones and double-digit royalties.

Lilly has the option to pursue other indications for teplizumab or other next-generation anti-CD3 molecules developed with MacroGenics, and if any other products based on the anti-CD3 molecules developed under the deal make it to market, the biotech could receive an additional $600 million or more.

MacroGenics is not disclosing when it expects to have data from the Phase II/III PROTEGE trial of teplizumab in Type I diabetes patients, which got under way in August 2007, Karrels said. However, the firm is expecting to complete enrollment sometime next year, he said.

Under the Lilly deal, MacroGenics is responsible for filing the biologics license application with the FDA for teplizumab, Karrels noted. The firm also has the rights to co-promote teplizumab in two indications in the U.S., he added.

Karrels said MacroGenics, which has about 140 employees, about 35 of whom are at the former Raven facilities in South San Francisco, is seeking additional collaborators - biotech and pharmaceutical manufacturers - for its other antibodies, which he called "ripe for the picking."

"There's a lot of partnering potential," Karrels said.

MacroGenics' Series D-2 round was led by Nextech Venture and included new investors Arcus Ventures, Innovis Investments and Lilly.

Also participating in the financing were existing investors Alexandria Real Estate, Alta Partners, CIDC, InterWest Partners, Mitsubishi UFJ, OrbiMed Advisors, Red Abbey Venture Partners, RiverVest, Texas Pacific Group Ventures and Ventures West.

In other financings news:

• Affiris GmbH, of Vienna, Austria, said investor MIG AG has increased its investment in the company by €3 million (US$4.38 million) for two new funds, MIG 5 and MIG 7, to give private investors in Germany and Austria the opportunity to invest in the biotech company.