TargeGen Inc. closed a Series D round, raising $40 million expected to fund upcoming Phase II development of its lead program, an eye drop for treating macular degeneration and other back-of-the-eye diseases.

Since it was founded in 2002, the San Diego-based firm has pulled in a total of $110 million, including a $30 million Series C round completed in late summer 2005. The latest financing should carry the company about 18 months, long enough to finish proof-of-concept studies of TG100801, a topical, small-molecule multitarget kinase inhibitor, expected to enter a Phase II trial in patients with wet age-related macular degeneration (AMD) "before the end of the month," said Peter Ulrich, president, CEO and co-founder of TargeGen.

Right now, the company's primary focus is on its ocular program, with hopes of getting to market the first topical treatment for wet AMD, a space dominated by the currently approved vascular endothelial growth factor (VEGF) inhibitors Lucentis (ranibizumab, Genentech Inc.) and Macugen (pegaptanib, OSI Pharmaceuticals Inc.), both of which are delivered through intravitreal injections. But unlike those two approved agents, both of which work via "a singular mechanism targeting VEGF," TargeGen's compound hits VEGF, plus targets affecting inflammation, angiogenesis and retinal detachment, Ulrich told BioWorld Today. "So we're going after the pathology of the disease in the most comprehensive way."

First-quarter sales of Lucentis, Macugen and Visudyne, a photodynamic wet AMD therapy marketed by Vancouver, British Columbia-based QLT Inc., totaled about $280 million, with the bulk of that - $211 million - going to Lucentis' maker Genentech. But Ulrich said that a topical agent could represent "a paradigm shift" for back-of-the-eye diseases," not only because an eye drop is a more convenient administration, but also because optometrists are able to prescribe eye drop therapies. "It could change the delivery of health care to AMD patients," he added.

Pending successful results in wet AMD, TargeGen also plans to investigate TG100801 as a prophylaxis in patients with dry AMD who are at risk for progressing to the more serious form of the disease. Wet, or neovascular, AMD is the leading cause of vision loss in the U.S. among people older than 50. Though dry AMD results in less severe vision loss, it progresses to wet AMD in about 10 percent to 20 percent of patients, Ulrich said, particularly those who already have one eye affected by wet AMD or who test positive for complement factor H, a gene linked to AMD.

"The goal is to intervene therapeutically before patients experience a loss of vision," he said. Once there has been a "high level of vision loss, there's less chance of reversibility."

Beyond AMD, the company also plans to investigate TG100801 in diabetic macular edema and in diabetic retinopathy.

TargeGen holds all rights to the compound. "We'll worry about partnering or other alternatives after the proof-of-concept trials," Ulrich said, though he added that the company does expect to partner the drug in order to penetrate the large ophthalmic market.

Funds from the Series D also will be used to move a second compound, TG101348, into the clinic and through proof of concept. TG101348, a Janus tyrosine kinase 2 (JAK 2) inhibitor, is expected to move into human testing in early 2008. That program is being developed for myeloproliferative diseases, such as myelofibrosis and myeloid metaplasia, polycythemia vera and essential thrombocytopenia.

In its preclinical pipeline, TargeGen has TG100115, a compound designed to inhibit the P13 kinase that previously was aimed at cardiovascular disease. After a feasibility study of an intravenous formulation in heart attack patients a couple of years ago, the program was "redirected," Ulrich said. The company returned TG100115 to preclinical development and is working on an inhaled version of the compound for asthma and chronic obstructive pulmonary disease.

TargeGen has about 60 employees, though much of its manufacturing, drug discovery and development work is completed through a long-standing collaboration with WuXi Pharma Tech, an R&D outsourcing company in Shanghai, China.

The Series D round was led by Innovis Investments, San Bruno, Calif.-based VantagePoint Venture Partners and Montreal-based CTI Life Sciences Fund. There also was participation from several existing investors, including Forward Ventures, of San Diego; Enterprise Partners, of La Jolla, Calif.; Chicago Growth Partners/William Blair Capital Partners, of Chicago; CDP Capital, of Montreal; BB Biotech, of Zurich, Switzerland; Hambrecht & Quist Capital Management, of Boston; and Pappas Ventures, of Research Triangle Park, N.C.

Peter Bissinger, of Innovis, joined TargeGen's board.