A high demand for cGMP manufacturing among small biopharmaceutical firms has prompted Althea Technologies Inc. to build a new San Diego manufacturing facility.

The contract services company raised $23 million in a Series C round announced Tuesday and intends to spend a portion of the net proceeds on a plant that will be validated for commercial services.

"There has been a real strong move to the virtual biotech companies," said Gary Gilmore, Althea's chief financial officer, explaining the need for a new plant. "They're allocating their resources to science and research and development, and not as much to plant and equipment. So consequently they're looking to outsource."

Founded in 1998, the San Diego-based company raised small amounts of seed money in its Series A and Series B rounds, making the latest financing its most significant to date.

Althea provides cGMP manufacturing services, as well as cGLP laboratory services, to hundreds of biotech and biopharmaceutical clients. Its services include the manufacturing of recombinant proteins, DNA-based therapeutics and vaccines, as well as aseptic filling, and gene quantification using real-time PCR and gene expression analysis.

Althea has one product, acquired in 2001 from a now-defunct company called Gene Trace. The eXpress Profiling platform enables high-throughput gene expression analysis. Althea received a Phase I Small Business Innovation Research grant in October 2004 from the National Cancer Institute to use the technology to validate gene-expression assays that serve as genetic signatures for the diagnosis of multiple pediatric cancers.

The eXpress technology incorporates the use of gene-specific and universal primers to lock gene ratios during the amplification process, a method that is able to yield 20 to 35 genes per reaction. It is licensed and used as a "software module" on Fullerton, Calif.-based Beckman Coulter Inc.'s research instrument, the GenomeLab GeXP Genetic Analysis System, Gilmore said.

He added that the Series C proceeds will cover the costs of the new manufacturing facility, which is expected to be "built out and validated in the fourth quarter" of this year. The remainder will be used for general corporate and strategic purposes.

"A portion of these funds are literally for war chest," Gilmore told BioWorld Today, "meaning that we will be looking for acquisitions either by purchase or in-licensing other technologies that may be strategically important for our business."

Althea has been profitable for several years, and the Series C was "in no way to finance burn rate," he said, so the company may not need to do another financing anytime soon.

Although the company has served a number of biotech firms, one near-commercialization product that it is preparing to manufacture for Phase III trials is Cambridge, Mass.-based Altus Pharmaceuticals Inc.'s human growth hormone drug. Altus awarded the manufacturing contract to Althea last August to produce ALTU-238, a crystallized formulation of human growth hormone designed to be administered once-weekly through a fine-gauge needle to treat HGH disorders.

Other recent contracts awarded to Althea have come from PowderMed Ltd., of Oxford, UK, to produce a plasmid DNA-based vaccine to combat influenza and from Lorantis Ltd., of Cambridge, UK, to manufacture the protein component of HepVax, a hepatitis B vaccine. Last summer, it was granted a $911,549 manufacturing contract by the National Institute of Allergy and Infectious Diseases to produce a DNA-based HIV-1 vaccine.

"Althea's business model has been to support biotech in the drug discovery phase," Gilmore said, "so we support preclinical, Phase I and Phase II, and some Phase III trials. We are not at this time manufacturing any commercial products."

But with a new facility by the end of this year, that could change, he said, emphasizing that it will be validated for commercial services.

In other financings news:

• Napo Pharmaceuticals Inc., of South San Francisco, entered into a binding letter of intent for a license of intellectual property. It also has entered into subscription agreements to place 3.5 million common shares with investors at 94.5 pence per share to raise £3.15 million (US$6.17 million) in net proceeds. The price is based on Napo's closing stock price on Friday. The license is for a patent and other regulatory information regarding NP-500, its clinical-stage product that has shown a benefit in diabetes, metabolic disease and stroke in preclinical animal studies. The compound has progressed through multi-dose Phase I testing. Napo is paying $1.5 million for the license, plus milestone payments and royalties. Proceeds from the financing will be used to progress NP-500 toward Phase II studies, and to expand Napo's focus toward a lower dose of crofelemer in a Phase III trial for HIV/AIDS-related diarrhea.

• Wex Pharmaceuticals Inc., of Vancouver, British Columbia, completed a private placement, raising $1.575 million in gross proceeds. The company issued 8.75 million common shares at 18 cents each. Wex intends to use net proceeds for general working capital. The company is focused on drug products to treat pain.