PharmAthene Inc. raised $50 million in its Series B round of financing.

The Annapolis, Md.-based company, which is developing products to fight bioterrorism, plans to apply a portion of the funds to continue its development of ToxBlox, an inhibitor of anthrax toxin.

"I think [what attracted our investors] is a combination of the management team here, the seriousness of the threat of bioterrorism and a really strong realization by the key members of these venture groups of the need to become involved in this," PharmAthene President and CEO David Wright said. "With BioShield passing, we have a business here that not only allows them an opportunity for a great return on their investment, but also an opportunity to really help the country in a significant manner."

The privately held company has raised $65 million in venture capital funds to date, with its last financing round completed a year ago, and Wright said the latest funds would carry PharmAthene to the threshold of an initial public offering. Its IPO timeline is forecast for the next 18 months.

PharmAthene also has raised about $19.5 million through federal funding, and its government partners include Defense Advanced Research Projects Agency and the U.S. Army Medical Research and Materiel Command. Both have provided funding and support for the development of ToxBlox.

ToxBlox (Dominant Negative Inhibitor, DNI) is a mutated form of the protective antigen (PA) produced by Bacillus anthracis that binds with naturally occurring toxic PAs. When bound to the PA heptamer, ToxBlox inactivates the anthrax toxin.

"We are applying for a request for proposals that the government issued for anthrax therapeutics, and that requires us to continue the development of ToxBlox," Wright said, noting that the intravenously delivered product is designed to treat hospitalized patients by preventing toxins from killing them. "We will be finishing the human safety trials, as well as finishing animal efficacy trials, and then finish manufacturing and compete for the contract."

Phase I studies will begin next month, as will non-human primate trials. PharmAthene already has completed two aerosol challenge studies in rabbits.

The initial research on ToxBlox, conducted by Harvard Medical School researchers, was funded through a grant from the National Institute for Allergy and Infectious Diseases, a division of the National Institutes of Health in Bethesda, Md. PharmAthene holds a license to the technology from Harvard.

"Additionally, we're going to use these funds to find other opportunities that we can participate in," Wright said. "It is our mission to become the leading biodefense company in the industry."

From its base in the Chesapeake Innovation Center, described as the first technology incubator focused solely on homeland security, the company also has a smaller program to develop a DNI-based vaccine. Wright declined to provide details on its other research activities. PharmAthene was founded in March 2001, and employs 14 staff members.

"The long-term strategy for the company, while we are focusing on bioterrorism, is to look for those technologies that focus on bioterrorism but may have applications in the commercial arena," Wright said, adding that PharmAthene expects to manage products with a relatively small, internal sales force. "For example, an antibiotic that works against anthrax but also has efficacy against resistant strep, would be a great product for us."

Its latest financing was led by MPM Capital in Boston and co-led by Bear Stearns Health Innoventures in New York. PharmAthene's sole Series A investor, HealthCare Ventures in Princeton, N.J., also participated.

"Not only is it exciting to raise money," Wright said, "but it's exciting to raise money from the quality of people that we were able to raise it with and be partners with."

Following the financing, the company's board will be expanded to include MPM's Ansbert Gadicke and Steven St. Peter, as well as Bear Stearns' Elizabeth Czerepak.

"I think you will see the company continue to bring products through development that will have a significant effect in improving the country's ability to survive a terrorist attack," Wright said. "And that is our focus."

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