Assistant Managing Editor

With all the recent headlines screaming about swine flu, it comes as no surprise that Pulmatrix Inc., a company working on therapies for influenza and other respiratory diseases, was able to pull in a solid $30 million Series B round.

And the hubbub over swine flu "certainly didn't hurt," said CEO Robert Connelly, particularly given that the Lexington, Mass.-based firm has produced some promising data in swine flu and recently landed a $2.2 million grant from the National Institutes of Allergy and Infectious Diseases to develop therapeutics for seasonal and pandemic flu.

But it was Pulmatrix's platform technology, which uses a pathogen-independent approach, that really caught the attention of investors, among them ARCH Venture Partners and corporate venture group Novartis Venture Funds, who led the Series B.

"We went into the funding round thinking flu would be [the primary driver]," Connelly told BioWorld Today. But the real interest seemed to focus on the "concept of our multiple-mechanism technology, which has the ability to take on all comers."

The company's technology emerged from laboratories at Harvard University and the Massachusetts Institute of Technology and is designed to boost the body's defense mechanisms against an invading pathogen to prevent and treat infections, without having to be pathogen-specific.

Most existing therapies are targeted to specific pathogens or strains, limiting their effectiveness, especially in diseases such as influenza.

"That's a perfect example," Connelly said. "A couple of years ago, we had bird flu, this year we've got swine flu and last year's seasonal flu was highly resistant to Tamiflu," one of the most commonly used flu treatments.

Tamiflu (oseltamivir) is sold by Roche AG.

But with Pulmatrix's technology, "it doesn't matter what the pathogen is," he said, since the therapy is designed to work by "triggering several different effects in the lungs."

On a biophysical level, it's aimed at enhancing the lungs' natural barrier effect, making it harder for pathogens to move to the cellular level. Then it boosts the lungs' natural clearance function to move pathogens out more quickly. And, importantly, on a biological level, it stimulates the hosts' natural defense mechanisms.

"You get all of these effects simultaneously," Connelly said.

The company is in Phase I/IIa testing with its lead formulation, designated PUR003, an inhaled cationic airway lining modulator. The influenza-challenge study is designed to enroll healthy subjects who will receive PUR003 before being infected with a mild strain of the flu. Results are anticipated by the end of this year.

An earlier study is testing the technology in an asthma model. The goal is to see whether it can boost natural responses to prevent and reduce reaction to allergens, and data are expected by the end of the first quarter of 2010.

After that, additional trials in flu and asthma are to follow, as well as studies in chronic obstructive pulmonary disease and "perhaps other indications," Connelly said.

Hopes are that the pathogen-independent approach can provide chronic treatment for progressive respiratory diseases "where infection can really be a death sentence," he said.

COPD patients, for example, suffer exacerbations of their disease caused by infections, With Pulmatrix's technology, "they could have a treatment taken each day that not only treats the infection but helps reduce" the risk of further infections, he added.

Pulmatrix anticipates moving into pivotal Phase II trials in 2011.

Funds from the latest financing, which brings the total raised to date to $46 million, should get the company nearly to the midpoint of that year, Connelly said.

The firm was formed several years ago, but remained under the radar at first, until a Series A closed in 2007. Now, with 33 employees, some government grant money and the recent Series B, "we've got the funding and people in place" to move forward, he said.

ARCH and Novartis Venture Funds co-led the round, with participation from existing investors Polaris Venture Partners and 5AM Ventures.

Lauren Silverman, of Novartis Venture, and Steven Gillis, of ARCH, both joined the company's board, which already included Terry McGuire, of Polaris; Scott Rocklage, of 5AM; David Edwards, Pulmatrix co-founder and professor of biomedical engineering at Harvard University; Mark Gabrielson, CEO of Ore Pharmaceutical Inc. and founding CEO of Pulmatrix; and Connelly.

In other financings news:

• GTC Biotherapeutics Inc., of Framingham, Mass., said strategic shareholder LFB Biotechnologies exercised its option to purchase $12.8 million of additional convertible preferred stock under the terms of a July financing agreement. The deal provides $6.4 million of new cash proceeds to GTC. LFB also entered agreements to purchase $3.6 million of common stock at the Oct. 30, closing price of $1.07, which would give LFB a further 3.4 million shares of common stock. The raisings are expected to help GTC regain compliance with Nasdaq listing requirements. The company also plans to reduce expenses by focusing on its ATryn and Factor VIIa programs. Shares of GTC (NASDAQ:GTCB) closed at $1.21 Monday, up 14 cents.

• Sernova Corp., of London, closed the first tranche of a nonbrokered private placement for gross proceeds of $365,000. It issued 3.65 million units, each consisting of one common share and one share purchase warrant. Proceeds will be used to fund development activities related to the firm's Cell Pouch System, a chambered device designed to become a vascularized organ-like structure to provide microcirculation needed for early function and long-term survival of cells.

• Sunesis Pharmaceuticals Inc., of South San Francisco, closed a private placement of $5 million of units consisting of convertible preferred stock and common stock warrants. That closing constitutes the second tranche of a private placement of up to $43.5 million reported in April. The remaining tranche of up to $28.5 million of common stock may be invested at the election of holders of a majority of the convertible preferred stock. Sunesis issued about 1.45 million shares of convertible preferred stock in connection with the closing, along with warrants to purchase about 14.5 million shares of common stock. Investors included funds managed by Bay City Capital, New Enterprise Associates, Alta Partners, Caxton Advantage Life Sciences Fund, Merlin Nexus, Nextech Venture, OpusPoint Partners, Venrock Associated and Vision Capital Advisors and members of Sunesis' management.