West Coast Editor

Gearing up to start a pivotal Phase III trial with its lead product, TolerRx Inc. raised $35.6 million in its largest financing ever, adding seven new investors that include the Juvenile Diabetes Research Foundation - which has never contributed cash to a company.

"We took in more than we originally planned," said Thomas Shea, chief financial officer of Cambridge, Mass.-based TolerRx, noting that the original target was $20 million to $30 million.

Most of the money raised will fund the Phase III pivotal trial of TRX4, an anti-CD3 monoclonal antibody for Type I diabetes, slated to start later this year.

Whether the cash will take TolerRx all the way through the trial is "a difficult question to answer [because] "there are too many variables," Shea said, but he allowed that the company will "probably have to raise more money."

Granted orphan status by the FDA in February, TRX4 is designed to block the function of autoreactive T-effector cells that cause autoimmune disease, and might work against psoriasis, rheumatoid arthritis and "hundreds of others," he said.

TolerRx in-licensed the compound from London-based BTG plc, and has finished a Phase Ia trial in subjects with moderate to severe psoriasis, testing the safety and pharmacokinetics after escalating single intravenous infusions.

The firm next plans to enroll subjects for a Phase Ib trial to examine multiple-dose regimens against psoriasis, but the main push with TRX4 now is for diabetes.

"Since the first use of insulin in 1922, there hasn't been anything significant to target the underlying disease," Shea said. About one in every 400 to 500 children and adolescents will develop Type I diabetes, according to the American Diabetes Association. In Phase II trials, TRX4 has shown efficacy for up to 18 months, and talks are under way with potential partners.

"Our preferred route would be to partner ex-U.S.," but the firm is considering all offers, Shea said.

TolerRx has preclinical programs with compounds that act in a manner opposite TRX4 - that is, they allow the effector or attacking T cells to become dominant, which could be useful against cancer.

"We have composition-of-matter patents for all of our products, and we also have some use patents for the lead product," Shea said.

TolerRx's direct competitor in anti-CD3 diabetes work is privately held MacroGenics Inc., of Rockville, Md., which in May pulled down $45 million in a Series C round.

Working to finalize the protocol for a potentially pivotal trial of its anti-CD3 antibody for diabetes, MacroGenics Inc. raised $45 million in a Series C round. The company said it, too, was finalizing the protocol for a pivotal Phase III trial. MacroGenics acquired its anti-CD3 molecule from Chicago-based Tolerance Therapeutics Inc. (See BioWorld Today, May 18, 2006.)

FrontPoint Partners LLC, a new investor, led TolerRx's latest financing round, and six other investors came aboard: Mesirow Financial, Swiss Re, QVT Fund LP, IBT Management Corp. and Brookstone Capital, along with the JDRF. Existing investors who took part included Skyline Ventures, Bear Stearns, Sprout Group, Rho Ventures, Artal Services NV and HealthCare Ventures.

In other financing news:

• Cempra Pharmaceuticals Inc., of Research Triangle Park, N.C., closed its first institutional round, raising $14 million. Venture capital firm Intersouth Partners and investment banker I. Wistar Morris III co-led the Series A, proceeds from which will be used to expand product development and to grow the portfolio of products. Garheng Kong of Intersouth Partners will join Wistar Morris on the company's board.