Talk about a fast start.

Anacor Pharmaceuticals Inc. is getting off the ground in a hurry with $7 million in venture financing and a $21.6 million, government-sponsored contract to develop therapeutics to counter the effects of a biological attack. Given the anthrax attacks last fall, the three-year contract certainly calls for a bit of development urgency.

The Defense Advanced Research Projects Agency (DARPA) funded Anacor's early technology development, dating to a $2 million grant in 1997, before the company was incorporated, and along with the U.S. Army Medical Research and Materiel Command awarded the latest joint contract to speed research and development of therapeutics for use against biowarfare agents such as anthrax.

"The financing environment right now is tough for all companies, so this gives us an opportunity to leverage this work we're going to do for the government and at the same time develop what we hope are antibiotics for community-acquired infections," Anacor CEO David Perry said. "The ultimate goal here is to create both a biowarfare drug and a generally available antibiotic that people can use for things that they might contract, for instance, from their kids at school."

While Anacor's government-related research will be applicable outside the contract, quick success with the DARPA award is paramount. The contract calls for a three-year window for Anacor to advance one compound as a bioterror treatment through Phase I testing and get a backup candidate into development. Three of six Category A-classified biowarfare agents - as defined by the U.S. Department of Defense - are tularemia, plague and bacteria, including anthrax.

"The contract is really focused mostly on anthrax, but of course is interested in the others and is paying for testing across the other two as well," Perry said. "Antibiotics work across the spectrum of bacteria, and you don't know what that spectrum is until you've tested it. So the expectation is that we'll probably find activity against other things as well."

The Palo Alto, Calif.-based firm, created in December to discover and develop antimicrobials to treat bacterial and fungal infections, initially will target staphylococcus, streptococcus pneumoniae, anthrax, tularemia and other infectious diseases. Such work goes hand in hand with the government contract, which allows Anacor to work with both biowarfare pathogens and community-acquired infections.

Anacor's products are designed to overcome bacterial resistance, based on technology created by company co-founders Lucy Shapiro of Stanford University in Palo Alto and Stephen Benkovic at Pennsylvania State University in State College. During Shapiro's work with Gram-negative bacteria, she discovered an enzyme required for bacterial life that does not exist in higher-level organisms. Benkovic then screened thousands of compounds, narrowing them to three that showed activity against the isolated enzyme.

"We've taken them through other testing to show a broad spectrum of activity, not just against Gram-negative bacteria but against many different types of bacteria," Perry said, adding that the most advanced work completed by the 11-employee firm is efficacy in animals in various pathogens, including community-acquired and biodefense strains. "But the vast majority of the work that we're doing today is work specified under the DARPA contract."

In return for an exclusive license to the technology, both schools received an equity stake in Anacor.

The privately held company this week raised further financial backing, with $4 million in a second round of venture funding. Since its April round of $3 million, Anacor has raised $7 million, with both lead investor Rho Ventures and Aberdare Ventures participating in each round.

"We've only raised $7 million, but that's because we're in the fortunate position to have a fair amount of money from the government," Perry said. "We believe that $7 million, plus the DARPA contract, will get us through Phase I results - roughly two years."

Outside of the government funding, the company's coffers are being channeled into development work for commercial compounds. Down the road, Perry said Anacor would likely look to distribution and marketing partners in completing development of such products, but that point remains a bit far away.

Anacor's board includes chairman Mark Leschly, a managing partner of New York-based Rho Ventures; Paul Klingenstein, a general partner at San Francisco-based Aberdare Ventures; Martin Rosenberg, recently retired as the senior vice president of anti-infectives and drug discovery at London-based GlaxoSmithKline plc; George Poste, a member of the defense science board of the U.S. Department of Defense and the chair of its task force on bioterrorism; as well as Perry and co-founders Shapiro and Benkovic.