Raising $74 million in a third round, Perlegen Sciences Inc. intends to build up its own pipeline of late-stage drugs.

Since its 2001 spin out from Affymetrix Inc., Mountain View, Calif.-based Perlegen has collaborated with large pharmaceutical companies, as well as non-profit and government institutions, in the areas of disease gene discovery and pharmacogenomics. Now, the company wants to apply that knowledge to its own in-licensed late-stage products.

"This particular round of financing is so important because now we have the funds to begin to build our own pipeline," said Robert Middlebrook, Perlegen's chief corporate development officer. "The work that we've done to date has been in partnership."

Perlegen raised the $74 million through a private placement of its Series D preferred stock with new and existing investors. The company's Series A stock was granted to Santa Clara, Calif.-based Affymetrix at Perlegen's inception in return for intellectual property and other assets. The initial financing of $100 million in 2001 involved Series B stock, while a second $32 million financing in February 2003 privately placed Series C stock. All told, the company has raised $206 million.

The third round should last Perlegen at least two years, although that would depend on how quickly the company acquires new products. The products initially will be focused on metabolic disease, cardiovascular disease and diseases of the central nervous system.

"These are all areas that have critical unmet needs, very significant market sizes and therapeutic areas where we believe physicians will be highly motivated to take the one-time step of prescribing a diagnostic test to help ensure their patients receive the best and safest medicine," Middlebrook said.

Perlegen has created a database of more than 1.5 million single nucleotide polymorphisms to help researchers determine drug response or a person's predisposition to certain common diseases.

"The only technology that can identify those multiple small signals is high-density whole-genome scanning," Middlebrook told BioWorld Today.

The company analyzes millions of unique genetic variations in DNA samples obtained from clinical trial participants, then uses the information to explain and predict the efficacy and adverse effect profiles of certain drugs. The company also is able to discover genetic variants associated with disease for potential new therapeutics and diagnostics.

In January 2004, Perlegen announced three deals for its technology. Its research pact with AstraZeneca plc, of London, aims at identifying DNA variants that raise heart attack risk. Perlegen also signed two deals with New York-based Pfizer Inc.; in one, Perlegen is studying drug response in patients with major depression disorder and the other focuses on research in markers associated with metabolic syndromes. (See BioWorld Today, Jan. 12, 2004.)

Later last year, Perlegen won a $2.8 million grant from the Michael J. Fox Foundation for Parkinson's Research, in which the company is working with the Mayo Clinic in Rochester, Minn., to determine SNPs related to Parkinson's disease. It also received a grant from the National Institute of Mental Health to determine the genetics of autism, and a grant from the National Institute on Aging for a whole-genome association study of Alzheimer's disease.

"SNPs are the most common form of genetic variation," Middlebrook said. "Whether it's common disease or drug response, about 50 percent of the causality is environmental and 50 percent is genetic. What Perlegen is able to do is find enough of that genetic component to create therapeutic utility."

Perlegen also is partnered with London-based GlaxoSmithKline plc, New York-based Bristol-Myers Squibb Co., Indianapolis-based Eli Lilly and Co., London-based Unilever plc and New Brunswick, N.J.-based Johnson & Johnson. The company's agreements typically include milestone payments and potential royalties for Perlegen.

The company received a $6 million grant in October from the National Human Genome Research Institute in Bethesda, Md., to support the International HapMap Project. Perlegen is working to create a haplotype map of the human genome.

The company's application of pharmacogenomics might improve drug safety, efficacy and market positioning. With the FDA preparing to make public its pharmacogenomics guidelines, Middlebrook said Perlegen's science is poised for good things.

"Certainly, in the wake of so many drug failures and problems just in the last three or four months," he said, "I think it's been a great time to be a world leader in our industry."

The company's technology involves high-density arrays of DNA probes on glass wafers. Each wafer holds about 60 million DNA probes that can be used to recognize longer sample DNA sequences. The method determines which probes the sample DNA hybridizes to more strongly, in order to determine if a known sequence of DNA is present in the sample.

Perlegen's third-round financing included several new and existing investors. CSK Venture Capital led the round, while new investors included Brookside Capital, Mizuho Securities, Glynn Capital Management, Cape Securities and several other U.S. and European institutional investors. Previous investors that participated included Alex Zaffaroni, Maverick Capital, Lombard Odier Darier Hentsch & Cie, Zesiger Capital, Sano Ventures, BSI SA, MPM BioEquities, SB Life Sciences, Unilever Ventures, Biofrontier Partners, Private Life Biomed, CMEA Ventures and Affymetrix.

"We were all very gratified by the overwhelming enthusiasm that we found both with our existing investors and a fabulous group of new institutional investors," Middlebrook said.

In other financings news:

• Arginox Pharmaceuticals, of Menlo Park, Calif., raised $25 million in a Series C round, which was led by existing investor Topspin Partners. Perseus-Soros Biopharmaceutical Fund also participated in the round. To date, the company has raised more than $42 million in venture capital and Small Business Innovation Research grants. The financing will allow Arginox to complete a global Phase III trial of Tilarginine Acetate injection to treat cardiogenic shock, and to expand its internal pipeline. Arginox plans to launch the Phase III trial of Tilarginine in the first half of this year at sites across Europe, Canada and the U.S.

• Point Therapeutics Inc., of Boston, priced a direct offering of about 3.7 million shares of common stock at $4.50 each to institutional investors. SG Cowen & Co. LLC was lead agent and sole book manager, while RBC Capital Markets was co-agent. The shares are pursuant to the company's $50 million shelf registration statement with the SEC. The company is focused on talabostat (PT-100), which is in Phase II trials and has the potential to inhibit the growth of malignant tumors and to reconstitute the hematopoietic system.

• BrainStorm Cell Therapeutics, of Tel Aviv, Israel, completed a final closing of its seed private placement in which it raised about $1.5 million. Previous closings occurred in October and November. The funding provides BrainStorm with its fund-raising obligations under the technology license agreement with Ramot at Tel Aviv University in which BrainStorm is developing its NurOwn platform. The platform is an autologous cell therapy for neurodegenerative diseases. Funding also will be used to cover costs of extending the company's management base, recruiting senior scientific personnel and building laboratory facilities for its research and development activity.

• Nautilus Biotech, of Paris, completed a €7.25 million round with a syndicate led by Paris-based Auriga Partners. Investors included Matignon Technologies, funds managed by Edmond Rothschild Investment Partners, FCJE and Pre-IPO Invest, Auriga Partners, 123 Venture and Creabilis Biotech, as well as existing investors. Nautilus plans to use the proceeds to take its lead product Belerofon (improved IFNa) into an investigational new drug application and move its next-generation, long-lasting, non-pegylated IFNß into advanced preclinical development.