With two drugs in clinical development and ongoing preclinical research for two other programs, Callisto Pharmaceuticals Inc. raised more money, an additional $4.02 million, in a Series A preferred stock financing.

The New York-based company had placed 172,000 shares of the stock and 2.3 million warrants since October, and now has placed another 402,100 shares and 5.4 million warrants, giving it total gross proceeds of about $5.75 million.

The warrants can be exercised at 75 cents per share any time within five years.

"We've got a lot of things going on and obviously this financing, although small, is an important step for us in strengthening our balance sheet," said Gary Jacob, Callisto's CEO and chief scientific officer.

As of Sept. 30, Callisto had about $124,000 in cash and cash equivalents, indicating the company needed to conduct a financing to continue on its current clinical path. It last raised $5.1 million in a private placement conducted in February. Callisto went public in 2003 when it merged with Synergy Pharmaceuticals Inc.

The company's stock (AMEX:KAL) closed Wednesday at 81 cents, up 8 cents.

Proceeds from this week's private placement will help the company fund its clinical trials. It has two clinical-stage drug candidates: Atiprimod and L-Annamycin. The first is in Phase II development to treat advanced carcinoid cancer and in a Phase I /IIa program to treat relapsed or refractory multiple myeloma.

"Atiprimod is an oral drug, a small-molecule drug [for which] we saw some encouraging indications in a smaller cohort of carcinoid patients," Jacob told BioWorld Today. Phase I data of the drug candidate showed measurable tumor regressions and a loss of debilitating symptoms of disease in three of five advanced carcinoid patients who had growing tumors and symptoms no longer controlled by standard therapies.

Callisto began dosing in a multicenter, open-label Phase II trial in November. The study is evaluating Atiprimod as a treatment for patients with low- to intermediate-grade neuroendocrine carcinomas, including advanced carcinoid cancers, with metastatic or unresectable cancer. It will include up to 40 patients and will measure target lesions and symptom relief.

"There's very little going on in advanced carcinoid patients," Jacob said, stressing that it is an area with little competition and a large need. The tumors are highly aggressive and often metastasize to the liver or lung.

Callisto's second clinical product, L-Annamycin, comes from the anthracycline family of anticancer drugs, but is novel because of its activity against resistant diseases. It also bodes well in terms of safety, offering significantly reduced cardiotoxicity compared to currently available drugs. The company initiated a clinical trial in adult relapsed or refractory acute lymphocytic leukemia (ALL) patients in late 2005, and expects to soon start a similar trial in children.

L-Annamycin was developed by M.D. Anderson Cancer Center scientists, and the FDA has given it orphan drug status to treat both relapsed ALL and acute myelogenous leukemia.

At the preclinical stage, Callisto is working on Guanilib, a potential treatment for inflammatory bowel diseases, such as ulcerative colitis.

"We would certainly like to file an [investigational new drug application] within the next year," Jacob said.

The program consists of agonists that are superior to uroguanylin, a peptide normally produced in the human intestinal tract.

Also, the company's Degrasyn platform is part of an exploratory program in collaboration with M.D. Anderson. Callisto licensed the technology from the cancer center in January 2005. The class of compounds promotes selective degradation of proteins involved in cancer cell survival and proliferation. Callisto intends to identify a clinical candidate and file an IND within two years.