Less than a year after withdrawing a proposed initial public offering, TolerRx Inc. dipped into the private markets, raising $31 million in a Series D round.

The funding should take the Cambridge, Mass.-based company through the first quarter of 2007, advancing its two lead compounds through the clinic and bringing a third candidate into human testing before the end of this year.

"It's very significant because it takes us to a number of milestones, which we think are significant value drivers for the company," said TolerRx President and CEO Douglas Ringler.

First, the company plans to move its lead product, TRX4, into a pivotal trial in 2006. The product recently completed an investigator-sponsored Phase II trial in Europe in patients with new-onset Type I diabetes mellitus, and the data are expected to be published by summer. TRX4, which was in-licensed from London-based BTG plc, is a humanized monoclonal antibody that binds to a receptor found on all mature T cells called CD3.

The company's second clinical product, TRX1, is a humanized anti-CD4 monoclonal antibody that is partnered with South San Francisco-based Genentech Inc. It has completed a Phase I trial in healthy volunteers, and is part of a Phase Ib trial in hemophilia A. Ringler said TRX1 will move into a Phase Ib trial in cutaneous lupus this year, then into a Phase II in that indication in 2006. That product was in-licensed from Cambridge and Oxford universities. The partnership with Genentech was signed in 2003, when TolerRx raised $35 million in its Series C round. (See BioWorld Today, Jan. 6, 2003.)

TolerRx has no immediate plans to partner TRX4.

"We anticipate holding on to the product as long as we can in order to build value for the company," Ringler told BioWorld Today, "but we are also evaluating our partnering strategy."

Ideally, the company will hold on to some marketing component for the diabetes product, possibly retaining rights to certain territories.

While TRX4 and TRX1 were both in-licensed, TolerRx has three preclinical products that were internally discovered. The products are designed to amplify the immune response for indications associated with cancer and chronic viral infections.

"We anticipate moving one of those three products into IND-enabling studies by the end of the year," Ringler said.

TolerRx's products are designed to induce and maintain immunological tolerance, the process by which the immune system identifies and avoids attacking the body's own tissues and proteins.

Founded in the latter part of 2000 by Ringler and Herman Waldmann, a professor from Oxford University, the company has raised $89 million total in its four rounds. It filed for a $75 million initial public offering in August 2003, but withdrew it the following July due to difficult marketing conditions.

"I think dependent on a number of variables for us, not the least of which are market conditions, we intend to raise additional capital resources in the latter part of 2006," Ringler said, "whether it be privately or publicly."

New York-based Bear Stearns Health Innoventures led the $31 million round, which included participation from all existing investors and other new investors, such as NIF Ventures, of Palo Alto, Calif., and certain individuals.

In addition to the financing, TolerRx announced the appointment of Wayne Hockmeyer as chairman. He is chairman and founder of Gaithersburg, Md.-based MedImmune Inc. and has served on TolerRx's board since April 2001.

TolerRx also appointed Stefan Ryser, general partner of Bear Stearns Health Innoventures, to its board, and it has hired Thomas Shea as chief financial officer.