Cytokinetics Inc. generated $40 million of working capital in closing its fifth round of financing, a preferred stock offering.

The privately held company said it would use the Series E funds to further its partnered clinical development program and advance additional programs into clinical work. South San Francisco-based Cytokinetics is focused on cytoskeletal drug discovery and development in the areas of oncology, cardiovascular disease and antifungal therapeutics.

"I think our success in this financing is a function of two key issues," Robert Blum, Cytokinetics' senior vice president of finance and corporate development and chief financial officer, told BioWorld Today. "First, our current investors stood very tall with us to ensure that we were not subjected to a lot of predatory practices of other investors in this environment. Second, the company has executed very well on its expectations and has produced product-development assets that are being recognized for their clinical value."

Cytokinetics, which has raised about $134 million in private equity since its founding about five years ago, said the oversubscribed financing was completed ahead of schedule. Blum said the latest funding would sustain the company "well through 2005."

"In particular, these monies are going to go toward our ability to fund options that we have in our current GlaxoSmithKline collaboration," he said. "[The options] allow us to co-fund development and co-commercialize products arising from that relationship."

The partnership with London-based GlaxoSmithKline plc has advanced one cancer drug into clinical trials, triggering an undisclosed milestone to Cytokinetics. The collaboration could reap up to $50 million over the course of the five-year agreement. (See BioWorld Today, June 26, 2001.)

In August, a Phase I trial began to evaluate the anticancer drug candidate in a U.S.-based, open-label, nonrandomized, dose-finding study. Designed to investigate the safety, tolerability, pharmacokinetic and pharmacodynamic profile of the small-molecule inhibitor of kinesin spindle protein in patients with advanced cancers, Blum said the company would release detailed data from the Phase I program at the American Society of Clinical Oncology meeting scheduled to begin at the end of next month in Chicago.

"We anticipate expanding clinical development with GlaxoSmithKline upon completion of these Phase I studies," Blum said. "From the standpoint of future value, that really is what investors have bought into. They are very enthusiastic about the potential for this drug candidate in the context of this collaboration."

Founded in 1998, Cytokinetics said the latest funding also puts it in position to advance two internal programs through proof-of-concept clinical studies. The company expects to file a pair of investigational new drug applications for two drug candidates this year - an oncology drug, another kinesin spindle protein inhibitor, and a sarcomere-directed small molecule to treat acute heart failure.

In its antifungal program, Cytokinetics is working to identify and characterize lead candidates and said it expects to begin efficacy testing in animal models this year.

The company applies its Cytometrix cellular phenotyping technologies to its research and development efforts. The automated cellular biology platform is designed to identify the cellular biological response of individual cells to a drug compound.

New investors included General American Investors, of New York; HBM BioVentures, of Zurich, Switzerland; PRM Ventures, of Palo Alto, Calif.; and Mizuho Capital Co. Ltd., of Tokyo. Existing investors included Sevin Rosen Funds, of Palo Alto; Credit Suisse First Boston Private Equity, of New York; Alta Partners, of San Francisco; Mayfield Fund, of Menlo Park, Calif.; Vulcan Ventures Inc., of Bellevue, Wash.; GlaxoSmithKline; and others.

Concurrent with the financing, Cytokinetics appointed two new board members - Charles Homcy, a board member at Cambridge, Mass.-based Millennium Pharmaceuticals Inc., where until recently he was the president of research and development, and Michael Schmertzler, a managing director of Aries Advisors LLC, sub-adviser to Credit Suisse First Boston Equity Partners LLC and its affiliates, and the chair of the investment committee of those funds.