A new financing for privately held Enanta Pharmaceuticals Inc. will push into the clinic the company's lead macrolide antibiotic to fight community-acquired respiratory tract infections.

The Watertown, Mass.-based company raised $12 million in the financing, which is the first part of a $40 million fund raising. The company is transitioning from solely a drug discovery business focused on its bridged bicyclic macrolides (BBM) to a discovery and development company, said Jay Luly, the new president and CEO.

The community-acquired RTI antibiotics market is about $20 billion worldwide, he said.

"Every successful drug that goes into that space is a billion-dollar entry," Luly told BioWorld Today. "So it's a very significant marketplace. We're just thrilled as a small company to have product candidates that can tap into this larger market."

Luly became CEO last July, and Paul Mellett took over as chief financial officer in September. Most recently, Luly was an entrepreneur in residence with Oxford Bioscience Partners. Prior to that, he held various positions at Millennium Pharmaceuticals Inc., of Cambridge, Mass.; LeukoSite Inc., which merged with Millennium; and Abbott Laboratories, of Abbott Park, Ill. Mellett was previously chief financial officer of Essential Therapeutics Inc., of Waltham, Mass. He also served in the same position at GelTex Pharmaceuticals Inc., a division of Genzyme General, of Cambridge, Mass.

Luly and Mellett came to Enanta as part of the company's transition.

"The company now is really entering a new stage, and for that you need to have a significant new financing, but you also want to try to assemble a team that has experience with regards to drug development and products," Luly said. "And certainly Paul and I both have that experience."

Luly said he expects the first compound to move into a Phase I trial the middle of this year. The company also has several follow-on projects in RTI and hospital infections, all part of the BBM series. Two blockbuster drugs currently on the market for RTI are New York-based Pfizer Inc.'s Zithromax and Abbott's Biaxin.

"Those are both very big drugs," Luly said. "They've had very successful and long runs but we feel there is room for new drugs that overcome some of the resistance problems."

The entire $40 million financing, when completed, should carry Enanta's lead compound through Phase II trials. At that point, the company would look to partner the drug for Phase III trials.

It will continue to seek the rest of the financing once it hits certain milestones with the Phase I trial, increasing the technology's value. "Much of what you learn in Phase I is pharmacokinetics and also acute tolerability," Luly said. "So we feel that the Phase I trials that we're embarking upon now will give us a very solid foundation looking forward."

In preclinical studies, Enanta's macrolides have shown activity against the target-resistant pathogens for RTIs. They also have demonstrated oral bioavailability. Existing macrolide compounds, such as Erythromycin A, are often accompanied by poor oral bioavailability, multiple daily dosing requirements and adverse gastrointestinal side effects like nausea or cramping, the company said. Enanta's researchers have chemically converted 16-membered ring macrolides to 14-membered ring structures that show antibacterial properties, providing the basis for the new therapeutics.

Erythromycin entered the U.S. market in 1952 and was the only available macrolide compound until Biaxin in 1991. Zithromax came on the market in 1992.

The financing was conducted with existing investors, including Techno Venture Management, of Munich, Germany; Oxford Bioscience Partners, of Boston; Advent International, of London; BioVentures Investors, of Cambridge, Mass.; NIB Capital, of Amsterdam, the Netherlands; Global Biomedicine, of New York; Swiss Life Private Equity Partners, of Zurich, Switzerland; Wheatley MedTech Partners, of New York; and Yasuda Enterprise Development, of Palo Alto, Calif.