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Selling only about 15 percent to existing investors, privately held FibroGen Inc. placed about $100 million in convertible preferred stock to advance its pipeline in a variety of programs and start more.

The financing gives South San Francisco-based FibroGen three to four years of cash, which is what it tries to keep on hand, said Laura Hansen, director of corporate communications.

"Any more and you're wasting money; any less and you're in a danger zone," she said.

Founded in 1994, the company has "had a really strong financing track record for the past 10 years, so we haven't had to access venture capital or institutional investors," she said, adding that a "major objective [with the current financing] was to get out there and talk to the U.S. institutional investors."

Proceeds are expected to boost staffing for clinical activities. FibroGen has 120 employees, but Hansen said it's too early to determine how many will be added.

Money will be directed toward more anemia programs, as well as the ongoing push in idiopathic pulmonary fibrosis and diabetic nephropathy. New clinical programs are on the way in acute renal failure, too, and in rare diseases in anemia and fibrosis, as well as cancer, the company said.

FibroGen in 2001 entered a deal with Tokyo-based Sankyo Co. Ltd. to discover and develop treatments for fibrotic disorders such as diabetic nephropathy, retinopathy and forms of renal fibrosis, pulmonary fibrosis, organ transplant rejection, liver fibrosis and atherosclerosis. That deal has run its course. (See BioWorld Today, Sept. 13, 2001.)

In September, the company entered an agreement with Yamanouchi Pharmaceutical Co. Ltd., of Tokyo, to license FG-2216, an erythropoietic small molecule for anemia. Yamanouchi got exclusive rights to develop and market FG-2216 and certain other FibroGen compounds with a similar mechanism of action to treat anemia in Japan. FibroGen retains rights in the rest of the world.

The company is focused on tissue fibrosis and hypoxia-inducible factor (HIF) biology to come up with therapies not only for fibrotic disorders but also anemia, ischemic disease, cancer and others. HIF is a protein that coordinates the body's responses to oxygen deprivation by turning on gene sets whose protein products are involved in cytoprotection, erythropoiesis, metabolism and vascular biology.

In the clinic, FibroGen has FG-3019, a fully human monoclonal antibody against connective tissue factor, a fibrosis mediator, in a Phase Ib study against diabetic nephropathy, and the firm recently filed an investigational new drug application to start clinical testing in pancreatic cancer.

From the HIF program emerged the orally active FG-2216 partnered with Yamanouchi. The compound has completed one Phase Ia trial. Three studies have been started to determine safety, tolerability and pharmacologic activity of the compound - one in patients with chronic kidney disease who have not yet received recombinant erythropoietin therapy; a second in CKD patients who will have recombinant EPO therapy withdrawn; and a third in cancer patients whose anemia is caused by chemotherapy.

"We think there's a lot of white space' in the anemia market," Hansen told BioWorld Today. "It's a lot larger than the area where EPO now plays." Amgen, of Thousand Oaks, Calif., developed the EPO blockbuster Epogen (epoetin alfa), which Johnson & Johnson sells under the trade name Procrit.

The mechanism of action of FibroGen's candidate is "completely different," she said. "We're stabilizing HIF. We call it complete erythropoiesis, because we're also affecting the iron metabolism of the body."

Other anemia patients FG-2216 might help are those with chronic kidney disease, pre-dialysis.

"You've got nephrologists who are seeing some of the patients, but some others are seeing a general practitioner in a primary-care setting," Hansen said. "The GP isn't going to stock recombinant EPO, and will be much more open to an oral small molecule."

Some anemia is caused by cancer itself (rather than chemo) and by other diseases, and FibroGen's drug might prove useful for them, as well as for elderly patients whose quality of life suffers because of their disease.

Also in the pipeline is FG-5017, a cosmetic dermal filler made of recombinant human collagen Type III formulated in saline with lidocaine as an injectable gel for dermal augmentation. The pivotal efficacy and safety study required for regulatory approval is expected to begin in 2005.

FibroGen's financing was led by Adage Capital Management, of Boston. Investors included Apothecary Capital, of Chicago; Brookside Capital Partners (an affiliate of Boston-based Bain Capital); Corriente Biotechnology Partners, of Dallas; Duquesne Capital Management, of Pittsburgh; Goldman Sachs, of New York; Janus Capital Group, of Denver; Merlin BioMed Group, of New York; Och-Ziff Capital Management, of New York; The Rosewood Corp., of Dallas; Sigma Capital Management, of Connecticut; and T. Rowe Price, of Baltimore.

Main investors outside the U.S. were Yamanouchi, SMBC Capital (the private equity arm of Japan-based Sumitomo Mitsui Banking Corp.) and Bio Fund Management, of Helsinki, Finland.

Credit Suisse First Boston, of New York, provided advice and help with the placement.

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