BioWorld International Correspondent

PARIS - Novagali Pharma closed a second funding round in which it raised €14.2 million (US$17.5 million) from seven French venture capital funds.

The financing took place in two stages, with an initial €5 million tranche completed in December and a second €9.2 million phase now. Since its creation in August 2000, Novagali has raised a total of about €18 million, having netted €3.8 million in its first financing completed at the end of 2000.

The investors that provided the company with its initial funding, Auriga Ventures and CDC Entreprises Innovation, both of Paris, also participated in the latest round. The other contributors also are Paris-based funds: Edmond de Rothschild Investment Partners, 123 MultiNova, Siparex Ventures, FCJE and Tech’Invest. A senior partner of Edmond de Rothschild Investment Partners, Raphael Wisniewski, joined Novagali’s supervisory board.

Novagali Chairman Jér me Martinez declined to tell BioWorld International how much each investor had contributed or provide a breakdown of current shareholdings in the company, but did say it had raised more than expected - the company had said it was looking for €5 million in the second tranche. Martinez said the company now has funds to last it for three years.

Novagali is based at Genopole, France’s national biotechnology science and business park in Evry. Novagali is developing drug delivery systems and focusing exclusively on drugs for the treatment of eye diseases such as dry-eye syndrome, glaucoma, age-related macular degeneration and diabetic retinopathy. It specializes in drugs dissolved in emulsions and produces cationic nano-emulsions, which are not only extremely fine, but also are positively charged.

Martinez attributed the investors’ enthusiasm to the promising results of Novagali’s first clinical trial. A Phase I study of its lead product, Cationorm, was completed at the end of 2003 in the indication of mild dry eye. On the strength of the results, which became available in the second quarter, the company is embarking on a Phase II trial.

At the same time, a Phase I/II trial of Novagali’s second ophthalmological drug candidate, a cyclosporine-based product, is getting under way in the indication of severe dry eye. Martinez added that there were several more candidates in preclinical development and that those studies would be completed early next year, when the company would decide whether to take one or more into clinical development.

Meanwhile, Novagali plans to initiate a Phase I trial at the end of this year of an oral formulation of the cancer agent paclitaxel, which is used to treat breast, ovarian and certain lung cancers. Martinez explained that this was a “historic product” for the company and would not be followed by others in oncology.

He stressed that Novagali’s formulation was more “user-friendly,” since it had fewer negative effects than the existing intravenous formulation and could deliver more intensive treatment because it could be administered more frequently. On completion of the Phase I trial, Martinez said, Novagali would license out the product to a pharmaceutical partner.

Novagali plans to partner its drug candidates before the commercialization stage, generating revenues. Another funding round might not be necessary, Martinez said. Further down the road, he added, Novagali might commercialize its products itself, but only once it had the resources that come with being a public company.

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