Serenex Inc. raised $31 million in Series D and debt funding to advance its lead compound for treating oral mucositis and the Hsp90 inhibitors behind that in the pipeline.

The Durham, N.C., company raised $26 million in its Series D round and added $5 million more in a debt facility. The company's fortunes have improved since it made the move to in-license the oral mucositis drug SNX-1012, and transition from a tools and platform company to one focused on drug development.

Serenex licensed the now-Phase II compound SNX-1012 in 2005, a move followed by its $30 million Series C financing round in September 2005.

"Two or three years ago we were struggling to raise money," said Ian Howes, chief financial officer and senior vice president of corporate development at Serenex. He observed how much easier it is for strong companies to get funding than those with weaker positions.

"We are fortunate to have two assets that are attractive," Howes told BioWorld Today. He said that money would last about 18 months, enough time to meet milestones in its two lead programs.

One upcoming event at Serenex is the expected release late this year of Phase II data on SNX-1012, a tetracycline analogue formulated as an oral rinse that is believed to target multiple inflammatory pathways. The Phase II trial, which began in July 2006, is testing the drug in solid-tumor patients undergoing chemotherapy or radiotherapy who develop oral mucositis.

Howes said a Phase III trial of SNX-1012 would be expected to get under way in mid-2008.

The second milestone to be evaluated in the time frame is Phase I data from the small-molecule heat shock protein 90 inhibitor SNX-5422, a trial that began last month. Behind the two clinical-stage compounds, the company has a number of preclinical and research-stage Hsp90 programs targeting oncology and other indications, and may be prepared by late 2008 to move an antifungal agent from that platform into the clinic.

"With this financing, we now find ourselves in the position that we can pursue a number of opportunities through 2008," Howes said, adding that those could include moves such as a reverse merger, an initial public offering and/or partnerships.

"The original plan was to partner the Hsp90 program; we've had a huge amount of interest from every major pharmaceutical company," mostly centered around oncology, he said. "We can't say we will do it, but we're seeing what sort of opportunities we can generate. We do not want to outlicense this. We want to maintain meaningful development and commercialization rights."

"We've recently come up with antiviral data and inflammation data," Howes said. "We're just scratching the surface of what Hsp90 is involved in as targets. In addition to those areas and the antifungal program, Serenex is eyeing a number of cancer applications as well neurodegenerative diseases with the Hsp90 program.

That platform entails use of a chemoproteomics platform followed by high-throughput screening. Howes said unlike traditional methods of screening compounds against an individual target, Serenex screens compounds against the purine-binding proteome, a supergroup of smaller protein families estimated to contain between 2,000 and 4,000 proteins.

Howes said Serenex's Hsp90-targeting agents could have a number of advantages over most other products in the field, large molecules based on the natural products geldanamycin, radicicol and purine. Serenex's small molecules have a low molecular weight and are biosoluble and bioavailable, as well as having the potential advantages of no liver toxicity and easier manufacturing, he said.

Serenex described Hsp90 as a molecular chaperone protein that regulates the folding and degradation of key signaling molecules involved in cell growth and survival. Currently, it said, more than 100 proteins are thought to depend on Hsp90 to various degrees for survival.

Howes said at least 20 of those are oncogenes, and Serenex also has identified different isoforms of Hsp90 that produce different disease-related results, a finding that led to a company program focused on Hsp90-selective inhibitors.

Serenex was founded in late 2000 and raised $2 million and $23 million in its Series A and B rounds, respectively, bringing its total funding now to about $86 million. It has 30 employees.

The $26 million Series D round included new investors Cornell Capital Partners, Pearl Street Ventures, MC Life Science Ventures and Pac-Link Bio Venture Capital, as well as existing investors Ritchie Capital, Intersouth Partners, Lilly Ventures, Mediphase Venture Partners, Takeda Research Investment and Seaflower Ventures. Specifics on the $5 million working capital debt facility were not disclosed.