Privately held ParAllele BioScience Inc. pulled in $22.5 million in venture capital, a Series B financing that will help the company develop and eventually commercialize its genetic discovery tools.

The South San Francisco-based firm, which has raised $30 million to date, expects the latest funding to last to a point of profitability, or about three years. Over that period, ParAllele expects to continue to develop its single nucleotide polymorphism (SNP) discovery, genotyping and variation scanning products based on its lab-in-a-tube approach.

"I think the investors were attracted to the strength of our technology, the fact that we already had demonstrated pharmaceutical interest through deals with Merck and Roche, our recognition from the NIH in being selected to participate in the International HapMap Project and our growing revenue stream," ParAllele President Nicholas Naclerio told BioWorld Today. "I think all those things made it easy to see that the company had a lot of momentum in the marketplace."

New investor Mohr Davidow Ventures led the round, which also included returning investors Abingworth Management, of London; Index Ventures, of Geneva; and Versant Ventures, of Menlo Park, Calif. Also, ParAllele shuffled its board membership to include Bill Ericson, a general partner at Menlo Park-based Mohr Davidow, as Francesco DeRubertis, an Index partner, stepped down.

While the company might have caught the eye of investors, its technology has begun to catch on in the industry. ParAllele uses single-tube assays to discover and screen for genetic markers and last week entered a deal with Hoffmann-La Roche Inc. related to genetic variations around Type II diabetes. The Nutley, N.J.-based company will provide samples to ParAllele, which will work to discover genetic variations associated with the disease by way of its SNP discovery and genotyping platforms. (See BioWorld Today, Sept. 17, 2003.)

Separately, Whitehouse Station, N.J.-based Merck & Co. Inc. is funding a SNP genotyping study being conducted by ParAllele as part of a collaboration reported in July. ParAllele and its 32 employees plan to use the latest funding to further raise their profile.

"This gives us the resources we need to start aggressively commercializing the technology," Naclerio said, adding that the financing allows ParAllele to build its product development and commercialization staff, as well as roll out a number of standard products. "The combination of our two platforms enables us to do the types of collaborations we're doing to help people understand the genetic basis of complex diseases, to develop more informative and predictive diagnostics and ultimately to develop better and more personalized drugs."

Founded in late 2001, the company was formed by Tom Willis and Ronald Davis. Willis and other scientists brought much of the technology from a lab at Stanford University managed by Davis, the director of the Palo Alto, Calif., school's Genome Technology Center and a biochemistry professor. Willis, previously an associate director of the Genome Technology Center, remains ParAllele's chief scientific officer, while Davis sits on the board. Other technology emerged from the University of California at San Francisco, and another academic contributor, Ulf Landegren, serves as chairman of ParAllele's scientific advisory board. He is a professor of molecular medicine at the University of Uppsala in Sweden.

"They were looking to develop technologies able to scale to whole genome-sized problems," Naclerio said, adding that previous genetic analysis tools were limited to testing a relatively small number of genes or only common mutations and defects.

He said ParAllele's first SNP discovery tool uses bacteria to sort through DNA and select fragments with mutations of interest. As a result, the process reduces by 100-fold the amount of sequence needed for analysis.

The company's SNP genotyping technology eliminates the need to amplify a DNA segment around each SNP prior to analysis by using specific intramolecular interactions. Its single-tube assays use molecular probes that are programmed to act independently, increasing the accuracy as the test reports only information about known target sequences among the billions of possible sequences found in the human genome.

"Because DNA has such a specific recognition mechanism for other pieces of DNA, we can actually put over 10,000 of these molecular DNA probes into one test tube at the same time," Naclerio said. "This enables us to look at many mutations all at once from a very small sample of DNA, without complex automation or robotics, since the complexity is being handled at the molecular level with our chemistry."

The results are read with standard lab instrumentation products such as DNA microarrays. Naclerio noted that the company plans to make the technology available to the entire research community, beyond large private and academic labs, with the hope of it becoming a standard genetic analysis technology.

Through a beta site established at the Baylor College of Medicine in Houston, ParAllele's technology is used for genotyping as part of the HapMap project, which is funded by the National Institutes of Health in Bethesda, Md. Over the course of the coming year, Naclerio said the company would look to establish additional pilot installations at academic centers. By the end of next year, ParAllele plans to distribute it more widely to smaller research labs as well.

Other alliances with pharmaceutical partners are planned as well.

"I think you'll continue to hear some interesting scientific discoveries coming out of some of the collaborations we have now, as we apply these tools for the first time to problems that people have looked at for a long time but been unable to solve," Naclerio said. "And we will continue to build business alliances and commercial growth."