Iomai Corp. put itself on much firmer financial footing Friday with a deal to raise $31.9 million through a private placement.

Iomai sold 6.29 million units consisting of one share and 0.7 warrants at $5.0675 per unit. The price for the shares was $4.98, the closing bid price Thursday, while the warrants - 4.4 million in total - were sold for about 9 cents per unit and are exercisable at $5.25 per share. The deal was made with undisclosed accredited investors, who gained a nearly 25 percent stake.

The Gaithersburg, Md.-based company is developing patch-based vaccine products for treating influenza and travelers' diarrhea.

"This private placement allows the company sufficient funding to gain Phase II immunogenicity information on all of its programs," Stanley Erck, president and CEO of Iomai, told BioWorld Today.

Iomai went public last year in a $35 million initial offering of 5 million shares at $7 per share. The stock (NASDAQ:IOMI) gained 1 cent Friday to close at $5.01.

Iomai previously reported being down to about $15.3 million in cash as of Sept. 30, with a loss of $9.3 million in the third quarter (fourth-quarter numbers have not yet been released). Since then, it received $10 million in October through a private placement of shares at $4.38 each, funding that was expected to take Iomai only to about the first half of this year.

Also, Iomai was allocated $14.5 million in January from a potential $128 million contract from the Department of Health and Human Services, to develop a dose-sparing patch for use with a pandemic influenza vaccine.

Iomai's transcutaneous immunization, or TCI, technology is being used in development of vaccines and immune system stimulants. It is applied to the skin through a patch that targets antigen-presenting Langerhans cells. Those skin cells carry the adjuvant into the lymph nodes, where it is designed to boost an individual's immune response to the vaccine.

The approach is being tested in a Phase II trial against travelers' diarrhea. It also is in a Phase I trial against influenza in the general population, while a Phase II trial was being planned to evaluate the technology for enhancing immune responses in elderly patients receiving the traditional influenza vaccine.

The Phase II trial in travelers' diarrhea began in August in volunteers traveling to certain areas of Mexico and Guatemala. The study is designed to assess the safety of the vaccine and the frequency of enterotoxigenic E. coli infection. Data from that trial are expected this quarter, Erck said.

In September, Iomai began a study of the technology in a head-to-head Phase I trial in the general population comparing the patch-based influenza vaccine with the traditional vaccine, delivered via intramuscular injection. That study will enroll up to 300 patients, and measure safety and immune responses. Data are expected in the first half of 2007.

The pandemic flu program, now in preclinical development, is expected to be in Phase II trials by the end of this year. The dose-sparing application that was the subject of the federal contract targets the avian H5N1 strain of influenza. The patch technology would be designed to be used with an injectable influenza vaccine, allowing for stimulation of an immune response to even small doses of vaccine. That would allow public health officials to extend vaccine supply in the event of a pandemic.

The $14.5 million HHS contract is a cost-plus, fixed-fee arrangement that takes the program through March 2008. The $128 potential value could be realized if the product is developed through FDA approval.

Iomai has said partnering the technology in the influenza indication is among its nearer-term goals.

The new financing leaves Iomai with about 25.5 million outstanding shares. The warrants included 2.2 million five-year warrants and 2.2 million shorter-term warrants, which will expire within four months after the resale registration statement for the shares becomes effective. That would be expected to occur later this year. Both sets of warrants carry the $5.25 exercise price. Cowen and Co. was placement agent.

In other financing news:

• MethylGene Inc., of Montreal, closed a previously announced bought-deal offering of 5.5 million shares at C$3.65 per share, raising gross proceeds of nearly C$20.1 million (US$17.1 million). The offering was made through a syndicate of underwriters led by Canaccord Capital Corp. and including Blackmont Capital Inc., Raymond James Ltd. and Clarus Securities Inc. Underwriters have a 30-day overallotment option to purchase up to 825,000 additional shares at the same price.