Athersys Inc. went from private to public by merging with a public shell company and, at the same time, raised $65 million in a private placement to fund ongoing development of its program aimed at obesity and a stem cell product for cardiovascular and other diseases.

The Cleveland-based firm completed a reverse merger with BTHC VI Inc. to gain a listing on the Over-The-Counter Bulletin Board.

The combined company's name will be changed to Athersys, and its ticker symbol will be changed to reflect Athersys' business.

As part of the deal, the company sold 13 million shares of common stock priced at $5 each in a private placement, along with warrants to purchase additional shares for $6 per share, to investors led by Radius Ventures and including OrbiMed Advisors, RA Capital Management, Accipiter Capital Management LLC, Hambrecht & Quist Capital Management LLC, MPM BioEquities and Pappas Ventures.

Athersys said the financing will support ongoing development of ATHX-105, a selective 5HT2c agonist that has demonstrated an ability to reduce appetite and result in weight loss in both animal models and humans. That program is in Phase I development.

Money also will go toward the company's MultiStem product, a non-embryonic stem cell approach for treating certain cardiovascular disorders, as well as for bone marrow transplantation support and other disease indications. Remaining proceeds will be used for preclinical development, debt repayment, working capital and general corporate purposes.

Founded in 1995, Athersys focuses on early stage programs in several disease areas. It also has entered a number of collaborations over the years involving its RAGE (Random Activation of Gene Expression) technology, which is designed to produce protein from virtually every gene in the human genome.

Cowen and Co. LLC and National Securities Corp. acted as co-placement agents.

In connection with the financing, Jordan Davis, of Radius; Mike Sheffery, of OrbiMed; and Floyd Loop, of Radius, joined Athersys' board.

In other financings news:

• ARCA Discovery Inc., of Denver, closed an $18 million Series B preferred stock financing. Proceeds will be used in part to file for U.S. approval and launch its lead investigational product bucindolol, a next-generation beta-blocker, vasodilator for heart failure and other indications. The financing was led by Skyline Ventures together with InterWest Partners as new investors with participation from existing investors Atlas Ventures, Boulder Ventures and the Peierls Foundation. The company completed a $15 million Series A round in February 2006. ARCA plans to submit a new drug application to the FDA in 2007 for approval of bucindolol for the treatment of heart failure patients.

• Inveni Capital, a newly formed Finnish-German venture capital company, closed its Inveni Life Sciences Fund I of more than €20 million (US$26.7 million). The fund ultimately is targeted at €50 million to €70 million. Investors in the fund include Finnish Industry Investment Ltd. as the biggest single investor, the University of Helsinki and several private investors and funds. Inveni Life Sciences Fund I will invest in early to growth-stage life science companies with proven product concept and strong market opportunity, and where the team's entrepreneurial and industry experience can make the difference in developing a company to international success. Inveni Capital will focus on medical technology and pharmaceutical companies in northern and central Europe, with special emphasis on Finland and Germany.

• Phytomedics Inc., of Jamesburg, N.J., secured a $9 million Series B financing round to advance Phase III development activities of its lead candidate, PMI-001, in rheumatoid arthritis, as well as for development of additional candidates in areas such as Type II diabetes, obesity and age-related frailty. Previous investors Inventages Venture Capital Investments Inc. and Burrill & Co. participated in the round.

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