BioWorld International Correspondent

Two Swedish firms raised modest levels of venture capital finance, evidence that the thaw in the investment climate in the region is tentative at best. Both took in intermediate levels of cash to fund near-term activities and to get them to their next milestones.

Cellectricon AB secured SEK53 million (US$7.1 million) in a Series B round led by existing investors InnovationsCapital, Investor Growth Capital and Karolinska Investment Fund, while InDex Pharmaceuticals AB raised SEK35 million (US$4.7 million) from CapMan, which also took an option to invest another SEK15 million.

Gothenburg-based Cellectricon is in the early stages of commercializing its Dynaflow microfluidic patch-clamping system for analyzing ion channel activity, which it launched in October. The company, which was spun out of Gothenburg University and Chalmers University of Technology in Sweden in 2000, previously raised SEK46.6 million. It could have raised more in this round by adding a new investor but was not satisfied with the valuation, CEO Jakob Lindberg told BioWorld International. Racking up more sales during the next year is the immediate priority.

"We believe that will help us raise more money," he said.

Dynaflow is designed to speed up and improve the quality of patch-clamping experiments. It allows scientists to alter the "chemical landscape" of a patch-clamped cell, enabling them to obtain multiple dose-response curves from a single study. Lindberg said it complements rather than competes with automated patch-clamping systems developed by companies such as Sophion Bioscience A/S, of Ballerup, Denmark, and Axon Instruments Inc., of Union City, Calif.

"They have sacrificed data quality to get that automation," Lindberg said. Their systems are best deployed during primary and early stages of secondary screening, he said, while Dynaflow is pitched at the lead optimization stage of drug discovery.

Individual Dynaflow instruments cost less than $30,000, but the company's main source of revenue eventually will come from sales of disposable, single-use microfluidic chips, which cost $100 to $150. The company already has secured AstraZeneca plc and GlaxoSmithKline plc, both of London, and Merck & Co. Inc., of Whitehouse Station, N.J., as reference customers. It now is seeking a U.S. distributor for Dynaflow.

"We were halfway through with a distribution agreement we would have been very happy with, but M&A activity came in on our partner's side," Lindberg said. Instead of signing a "quick-and-nasty" deal, the company is looking for an appropriate partner. "We are willing to lose some momentum to get it right at the end of the day, rather than just rush it through right now," he said.

Svante Rasmuson, CEO of Stockholm-based InDex, told BioWorld International that the SEK35 million it has raised would fund activities for the next year.

"We did not want to go higher than that because [if things] go according to plan with Serono, we would not need more than that," he said. In February, InDex signed a development pact worth up to $35 million with Geneva-based Serono SA. The deal involves Kappaproct, an antisense compound undergoing a Phase II trial, as a treatment for ulcerative colitis. (See BioWorld International, Feb. 25, 2004.)

A successful outcome of the trial would trigger the next milestone payment. InDex, which previously raised SEK67 million, has not yet finalized a plan B in the event of a poor result.

"If we end up in a gray zone on the outcome of the Phase II studies, we will have to sit down and discuss the options," Rasmuson said. But it has earmarked the current funding round for additional projects. The cash will be used to finance drug discovery work on a half dozen novel targets, primarily in inflammation but also in oncology, he said. The company also is engaged in discussions on out-licensing a diagnostic based on a set of genetic markers that distinguish between Crohn's disease and ulcerative colitis.

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