Preparing to push its preclinical protein kinase C programs into the clinic, KAI Pharmaceuticals Inc. brought in $35 million in its Series B round.

Closing only a few months after KAI partnered its only clinical-stage product in a large pharma deal, the funding "was an opportunistic financing for us," said Steven James, president and CEO.

The South San Francisco-based company, which received a $20 million up-front payment upon signing a collaboration with Daiichi Sankyo Co. Ltd. in January to develop and commercialize KAI-9803, a delta PKC inhibitor, decided to conduct a financing round only "if we could attract high-quality, new investors, along with our existing investors, in an attractive deal," James said. "And, fortunately, it came together that way."

Stockholm, Sweden-based Investor Growth Capital Inc., the wholly owned venture capital arm of Investor AB, and San Francisco-based Aberdare Ventures led the round, with participation from existing investors Skyline Ventures, of Palo Alto, Calif.; InterWest Partners, of Menlo Park, Calif.; Intersouth Partners, of Research Triangle Park, N.C.; Delphi Ventures, of Menlo Park, Calif.; Thomas Weisel Venture Partners, of San Francisco; and MDS Capital, of Toronto.

Curt LaBelle, of Investor Growth Capital, and Daniel Kisner, of Aberdare Ventures, joined the company's board.

To date, KAI has raised $63 million, said Kristine Ball, vice president of finance and administration and chief financial officer. She added that the Series B round, plus funds from the Sankyo collaboration, is expected to carry operations for about three years, "bringing us into early 2009."

The company closed its $28 million Series A in two rounds, bringing in $17 million in December 2003, and adding $11 million nearly a year later. (See BioWorld Today, Dec. 5, 2003, and Oct. 27, 2004.)

Funds will be put toward expanding the company's research and development pipeline, comprising therapeutics aimed at either activating or inhibiting specific intracellular PKC isozymes that affect disease pathways. The goal is to "have up to five clinical programs by the end of 2008," James said.

One preclinical program is an epsilon PKC activator designed to work as a cardioprotective agent to prevent ischemic damage during surgical procedures such as bypass graft surgery.

KAI also has early stage programs targeting other PKCs for neuropathic and inflammatory pain, and "we would expect those to be the subject of [investigational new drug applications] in the next couple of years," James told BioWorld Today.

Beyond those programs lie earlier opportunities in inflammation and possibly oncology, he added.

KAI intends to retain all rights to those programs until it has clinical efficacy data in hand. At that point, it will begin reviewing options for late-stage development and commercialization.

The only exception is a PKC-based program made of compounds with anti-angiogenic properties for ocular indications. In that case, KAI will seek a preclinical collaboration because "it will require specific expertise in ophthalmology" to conduct efficacy studies and clinical trials, James said.

In the meantime, KAI is continuing to work on the joint development of KAI-9803 with Tokyo-based Sankyo, and recently reported completing enrollment in a 150-patient Phase I/II trial in patients with acute myocardial infarction who are undergoing reperfusion via balloon angioplasty. Safety and efficacy results from the trial are expected later this year.

KAI-9803, which was granted fast-track status by the FDA, is administered through a balloon catheter into a patient's coronary artery just prior to reperfusion and is designed to reduce the damage that can occur when blocked blood vessels are reopened during angioplasty.

In January, KAI entered the global deal with Sankyo, worth up to a potential $340 million.

Terms called for an up-front payment of $20 million, as well as development and commercialization milestones of up to $300 million for the first two indications, plus royalties.

KAI also could receive and additional $20 million in research funding over a five-year period for identifying new delta PKC compounds, routes of administration and indications. (See BioWorld Today, Jan. 9, 2006.)

In other financings news:

• Adventrx Pharmaceuticals Inc., of San Diego, filed a shelf registration to offer and sell up to $100 million worth of common stock, with terms of any offering to be determined by the company at a future date. Proceeds might be used for general corporate purposes, including financing clinical development programs. Adventrx focuses on developing improved treatments for cancer and infectious diseases.

• PSivida Ltd., of Perth, Australia, is raising gross proceeds of A$29 million (US$22 million) through a rights offering of one ordinary new share of the company for every eight shares held at May 22 at an issue price of A60 cents per share. Excluding the effect of vested options, the offering could result in the issuance of up to 48.25 million new ordinary shares. Proceeds will be used to fund Phase III trials of Medidur in diabetic macular edema, and Phase IIa trials of BrachySil in operable pancreatic cancer.