Staff Writer

Salmedix Inc. raised $27.5 million in a Series B financing, money it plans to use to fuel Phase II trials of two compounds.

The San Diego-based company was organized in January 2001, receiving $10 million in Series A funding at the same time, but Chairman and CEO David Kabakoff said the company started functioning in earnest about mid-2001. Kabakoff, who helped found the company along with its scientific founders at the University of California, came on board full time in September.

Of the new funding, Kabakoff said, "We are pleased to get this done in a rather choppy market."

He said it is his belief that investors' enthusiasm for Salmedix can be attributed to the company's focus on "discrete products at a relatively advanced" clinical stage, despite the company being only slightly more than a year old. Salmedix's strategy is to in-license compounds that have some clinical data already available, and it has a network of individuals it calls "drug hunters" who are on the lookout for more opportunities.

The money should take the company through the next two years, he said.

Salmedix has SDX-101 in multiple Phase II trials that should run through the third quarter of next year. SDX-101 is described by the company as a small-molecule, orally active agent that is a single-optical isomer of an existing marketed anti-inflammatory drug. The first Phase II trial, which began in July 2001, is in chronic lymphocytic leukemia patients and is scheduled for completion by the end of the third quarter.

"The data we have so far suggest it will be a safe drug," Kabakoff said. "It is potentially in a new class of chronic oral therapeutics for cancer, which is an attractive new class that's evolving right now."

Cancer drugs like Gleevec are leading the way in this evolution, he said.

A second compound, SDX-102, is a small molecule that has been studied by the National Cancer Institute in Bethesda, Md., and the University of California at San Diego. Salmedix is focusing on different cancers than those originally studied, however.

An individual's suitability and likelihood of responding to SDX-102 would be determined by a Salmedix test to characterize the molecular nature of the cancer, much like a tumor genotyping test.

That compound will begin Phase II testing in a number of tumor types, including both solid tumors and hematologic cancers, most likely in sarcoma and non-small-cell lung cancer, in the fourth quarter, Kabakoff said.

Salmedix also has SDX-103, a selective tubulin-binding agent, in preclinical studies. The company said it is a patented agent that induces apoptosis in non-dividing, multidrug-resistant cancer cells at concentrations that do not affect normal cells.

New investors CMEA Ventures Life Sciences, of San Francisco, and Delphi Ventures, of Menlo Park, Calif., led the funding round. Other new investors were Aberdare Ventures, of San Francisco; BioFrontier Global Investments, of Tokyo; GeneChem Therapeutics Venture Fund, of Montreal; ProQuest Investments, of San Diego and Princeton, N.J.; and Ventures West, of Vancouver, British Columbia.

Previous investors that participated in the Series B round were InterWest Partners, of Menlo Park; Versant Ventures, of Menlo Park; and Alexandria Equities, of Pasadena, Calif.