A product that began development more than 15 years ago but never gained traction is back on the market, and the company that now owns it raised $25.5 million to support the recent relaunch.

Advanced BioHealing Inc. completed a Series C financing round to support sales of Dermagraft, a bioengineered tissue product that was approved in 2001 for treating full-thickness diabetic foot ulcers. The company — and investors - believes it can do what previous product owners couldn't, and that is to successfully commercialize Dermagraft.

Advanced BioHealing, of La Jolla, Calif., acquired Dermagraft, TransCyte and related manufacturing technology last May. It began product sales two weeks ago.

"The launch is going great," said Kevin Rakin, CEO of Advanced BioHealing. "We spent a lot of time talking to doctors about the product, thinking about positioning. We brought a very focused approach to the clinical benefit of these products [and having them] become the standard of care for wounds, diabetic foot ulcers in particular.

"It's taken awhile for the market to appreciate the benefit of these next-generation living cell products," he told BioWorld Today. "It's still early in the marketing acceptance of these products as a standard of care."

The company has marketing, sales and reimbursement teams, including representatives in the field, as well internal people in sales and customer service. Advanced BioHealing has more than 60 employees in all. Rakin said the privately held firm was not disclosing initial Dermagraft sales numbers.

He did say, however, that due diligence done by the company and its investors showed it "was very clear there is a loyal following for this product from physicians fighting diabetic foot ulcers." The condition results in amputation in 20 percent of cases, Rakin said.

Dermagraft clinical development goes back at least to the early 1990s, when Marrow-Tech Inc. - which soon after changed its named to Advanced Tissue Sciences Inc. - was conducting early testing of the dermal skin replacement product in indications including burns, chronic venous skin ulcers and diabetic ulcers. Advanced Tissue gained FDA approval of its premarket approval application in 2001 for diabetic foot ulcers.

But Advanced Tissue ran into money problems, and in 2002 sold its interest in Dermagraft and TransCyte to partner Smith & Nephew plc as part of bankruptcy proceedings. London-based Smith and Nephew, however, decided to exit that business at the end of 2005 because Dermagraft had not achieved the desired market penetration, Rakin said.

That's where the young company Advanced BioHealing came in. It had a newer-generation bioengineered tissue product, Celaderm, in early development and acquired the Smith & Nephew wound-care assets in May.

"The opportunity to get current-generation approved products just made so much strategic sense," Rakin said. "Overnight we went into from an early-stage development company to one of the few biotech companies with revenues and our own distribution channel."

Dermagraft is a cryopreserved human fibroblast-derived dermal substitute, consisting of fibroblasts, an extracellular matrix and a bioabsorbable scaffold. It is manufactured from human fibroblast cells derived from newborn foreskin tissue.

TransCyte, a human fibroblast-derived temporary skin substitute, was approved in 1997 for use as a wound covering burns.

Rakin said Advanced BioHealing will evaluate later whether to relaunch that product.

In the meantime, the first patient was enrolled in the initial Celaderm pilot study, which is evaluating safety as well as its potential in accelerating the healing of venous leg ulcers. An advantage of that product, Rakin said, is that it can be stored at warmer temperatures that don't require specialized freezers.

Since Celaderm - like Dermagraft — is designated by the FDA as a device, Advanced BioHealing could move directly to a pivotal study if the pilot trial is successful.

Rakin said most of the $25.5 million in funding will be used to support sales and marketing of Dermagraft. Funds also will be used in Celaderm development, and for other purposes.

"We believe we can become one of the unique companies in the broader area of regenerative medicine," Rakin said.

He said the there "was more demand" for the financing than the company anticipated, and it is considering a second close. Funds are expected to support the company through the break-even point, Rakin said.

Advanced BioHealing received $2.4 million from a Series A investment in October 2004 and $8 million in Series B in November 2005, both before the Dermagraft acquisition.

Safeguard Scientifics Inc. led the Series C financing. Other investors included Channel Medical Partners and Red Abbey Venture Partners LP, as well as Series B participants Canaan Partners and Wheatley Partners.

In other financing news:

• Antares Pharma Inc., of Ewing, N.J., closed on a secured credit facility consisting of two term loans that together total $10 million. The lenders are MMV Financial Inc. and HSBC Capital (Canada) Inc. Antares received $5 million from the first closing, and has access to an additional $5 million between Sept. 30 and Dec. 31. In connection with the credit facility, Antares also issued warrants to the lenders to purchase 640,000 shares at $1.25 per share. Terms of the loan were not disclosed. Antares is developing drug delivery systems and injectable device engineering capabilities.

• GammaCan International Inc., of Kiryat Ono, Israel, completed a $6.5 million private placement with a group of investors led by T.R. Winston & Co. LLC. The company issued 16.3 million shares priced at 40 cents apiece, plus warrants equal to the amount of the shares, exercisable at 48 cents each. Proceeds will be used to support ongoing development of VitiGam, a second-generation intravenous IgG-based immunotherapy product, in Stage III and Stage IV melanoma patients.

• Clinical Data Inc., of Newton, Mass., said it raised about $3.7 million through the exercise of 190,505 shares at $19.45 per share. They were exercised by affiliates of Chairman R.J. Kirk, which received them in connection with a $17 million private placement in June. Funds will be used to support the ongoing Phase III clinical trial of the dual serotonergic antidepressant Vilazodone, which is scheduled for completion later this year, and other programs.

• Serica Technologies Inc., a Cambridge, Mass., medical device company developing a silk-based biomaterial platform for connective tissue repair, said it received $12 million in a Series C financing. New investor Prism VentureWorks co-led the round with existing investor Morningside Technology Ventures. Ivy Capital Partners also joined as a new investor. The financing will fuel development of SeriACL for anterior cruciate ligament repair, SeriCuff for rotator cuff injury and Eplica products for aesthetic and reconstructive plastic surgery.