BioWorld International Correspondent

MUNICH, Germany - "The key word was perseverance," Edward Stuart, chief business officer of U3 Pharma AG, said after the company closed its second round of financing, securing €13.25 million in a round co-led by Atlas Venture of London and LCF Rothschild Venture Partners of Paris.

U3, of Martinsried, is moving several antibody and small-molecule product candidates toward clinical development based on disrupting specific signal transduction pathways. Those pathways are one of the most important mechanisms through which cells communicate processes such as proliferation, growth, metabolic regulation and survival.

"At the outset we in-licensed six different patent families from the Max Planck Institute for Biochemistry," Stuart told BioWorld International. "There were components for signal transduction, downstream substrates, themselves kinases, and ligands for the receptor targets.

"That leaves us with multiple shots" for drug development, he said. "We have the ability to do both small molecules and monoclonal antibodies."

Promising science is not sufficient to win funding in a difficult European venture capital market. "One plus was that the science that has come out of [U3 scientific founder] Axel Ullrich's lab has time and time again proved commercializable," Stuart said. "Another aspect is that we've always focused on bringing targets into product development.

"Support from our current investors was also key," he said. The company's first round of investment was led by Alta Partners, of San Francisco. "The depth of experience that a big American partner brings is worth its weight in gold."

In addition to the two co-lead investors, BioMedical Sciences Investment Fund of Singapore is a new investor. Alta Partners made a commitment that U3 describes as significant, while investors from the first round, including BioM and Medicis Venture Management, both of Munich, also increased their investments. As part of the financing, Joel Besse, of Atlas Venture, and Michele Ollier, of LCF Rothschild Venture Partners, have joined U3's supervisory board.

The funds will be used to advance several anticancer candidate drugs through investigational new drug filings and into clinical development. U3 is developing therapeutic products based on targeting specific components of cellular transduction systems involved in diseases such as cancer and other hyperproliferative diseases. In addition, the financing will be used to support the company's position among the next generation of signal transduction companies by filing and acquiring complementary intellectual property, performing continued business development activities and engaging in general corporate expansion.

"We are aiming to make our first IND filing in 2004," Stuart said. After that, he expects the usual time to clinical trials, implying that the company could begin its first trials by the end of 2004.

The company's current efforts are focused on oncology. "We have good disease association with all of our targets, in areas such as breast, colon and prostate cancer," Stuart said. "We also believe that a lot of these targets are involved in nonmalignant conditions, which we will investigate given time."

Stuart expects the present round of financing to carry the company at least through the end of 2005.

Looking further down the line, Stuart said that the company would like to take some of its products through Phase II clinical trials. "Because we have a number of products," he said, "with the more advanced ones we will go to the end of Phase II, while with others we will try to bring things in parallel to partner post-IND or post-Phase I."