Elusys Therapeutics Inc. raised about $10.2 million after completing a private placement of Series D preferred stock.

The Pine Brook, N.J.-based firm said it would use proceeds to develop its drug portfolio, which includes antibody-based therapies to fight cancer, lupus nephritis, infectious diseases and anthrax.

"One of the principle reasons [behind the financing] was the advancement of our program in biodefense to the point where the government with its BioShield legislation has agreed to spend $5.7 billion on products like ours over the next 10 years," Elusys President and CEO Stephen Sudovar told BioWorld Today. "We are very confident that the product is not only a competitive product, but will be the premier product for anthrax as an antidote. In addition to that, we have a pretty rich pipeline of products, and there are a couple that are very close to the clinic."

Called Anthim, the anthrax product's development has been supported for three years by government funding. Sudovar said testing in two species have proven its efficacy to date, adding that the company soon plans to enter the product into nonhuman primate efficacy studies followed by safety evaluations in humans.

"It's the only intramuscular formulation for an anthrax antidote," he said. "In addition to that, it appears to be effective both in pre-exposure and in post-exposure. So it differentiates itself considerably from other competitors in the field."

Its ongoing collaboration with the Department of Defense not only includes the anthrax product, but also is supporting the development of other biodefense therapeutics for botulism, vaccinia and plague. Through those agreements, Elusys continues to receive more modest government funding.

"Most of the government funds will be useful in primarily advancing the product for anthrax," Sudovar said, "which we expect to secure procurement for, if we're successful. That would be a large infusion of capital if the government were to stockpile it."

Outside of an undisclosed amount of government support, Elusys has raised about $40 million in private financing since its 1998 inception. It has advanced one product into clinical testing overseas and another into late preclinical development. They stem from the application of a monoclonal antibody-based technology called the Heteropolymer System, which is designed to allow a body to use its own red blood cells to remove and destroy blood-borne pathogens and auto-antibodies.

A product for cancer, ETI-210, is designed to supplement the efficacy of Rituxan (rituximab, from Genentech Inc. and Biogen Idec Inc.). Sudovar said Elusys is refining its manufacturing process, during which time it will continue to discuss an investigational new drug application with the FDA to begin clinical testing.

Its product for lupus, ETI-201, has been tested in a Phase I study in Germany. The trial showed it to be safe and also pointed to its ability to reduce auto-antibodies to double-stranded DNA. Sudovar said Elusys, which is working to file an investigational new drug application to evaluate ETI-201 in the U.S., likely would seek a partner for its further development.

An earlier-stage program in infectious diseases is evaluating the use of Elusys' technology for bacterial and viral infections.

Sudovar said the added funding from the Series D round, coupled with government support, would carry the company's operations for another two years. Elusys last raised private funds three years ago, when it closed a $17 million Series C round. (See BioWorld Today, July 18, 2001.)

The latest internal financing was led by Invesco Private Capital Inc., of New York, and Essex Woodlands Health Ventures LLC, of The Woodlands, Texas. Virtually all existing preferred shareholders made follow-on investments, Elusys said, noting that additional institutional shareholders include Crescendo Ventures, of Minneapolis; Eagle Advisors, of New York; and the Legg Mason Emerald Fund, of Washington.

"The participation rate was very high," Sudovar said, "which shows to me, at least, the confidence that these existing investors have in what we're doing."

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