XenoPort Inc. came off the financing trail with a $43.9 million Series C under it arm - its largest round to date.

And it's a tough trail - the biotechnology sector, with more failures than approvals lately, with more company foldings than initial public offerings, has had better days. But there were a couple of things that made the trip fruitful for Santa Clara, Calif.-based XenoPort, said Bill Harris, its senior vice president of finance and chief financial officer.

"First, people are excited about the technology and the business model of what we are doing," he told BioWorld Today. "We're using [our] technology on drugs relatively close to clinical trials. We are addressing two needs of investors - one is having a platform technology and the other is [a platform technology] whose output is drug product candidates."

Drug product candidates help investors take notice, and XenoPort has now raised more than $90 million in its three major rounds - about $15.9 million in its Series A, $30.5 million in a Series B, and the nearly $44 million Series C. Harris said the latest round should "fund operations through the end of [2004], at least."

Founded in 1999 by current CEO and President Ronald Barrett, Mark Gallop and Bill Dower, the company has grown to 86 employees. The three men worked together for Affymax Research Institute, of Palo Alto, Calif., before starting XenoPort and focusing on improving the bioavailability of drugs by studying proteins involved in active transport of molecules into and through cells.

XenoPort's initial focus is to use transporter proteins to improve the oral absorption of small-molecule, peptide and protein drugs. Harris said XenoPort's approach is to engineer drugs to become substrates for active transport mechanisms already present in the body - for now, in the intestine.

"There are two applications," he said. "The near-term focus is on drugs off patent now or that will go off patent [shortly]." Longer term the goal would be to apply the technology to novel compounds, either on its own or through collaborations, he said.

XenoPort expects to enter the clinic next year with a reformulated Pfizer Inc. product.

"The most advanced project is the gabapentin program," Harris said. "It's sold under the trade name Neurontin. The indication is for adjunctive therapy for epileptic seizures, but a significant number of sales is off-patent CNS indications, such as neuropathic pain."

The company is working on applying the technology to other, undisclosed drug molecules and has a research program to "identify and characterize active transport molecules we believe will be useful for this application," Harris said, acknowledging that while XenoPort is focused on oral absorption at this time, other areas, such as the blood-brain barrier, are potentially on the horizon.

"There are quite a few active transport mechanisms out there," he said.

The privately held company is in collaborative discussions, and expects to have at least one deal signed this year. In fact, that's one of the company's goals for the next 12 months.

"The clinic is one, clearly," Harris said. "And establishing at least one collaboration with a large pharma partner is another."

The financing round was led by HBM BioVentures AG, of Switzerland. New investors in the company are Lilly BioVentures, of Indianapolis; Lotus BioScience Ventures, of Hong Kong; Novartis BioVentures Ltd., of Basel, Switzerland; and The Invus Group, of New York. Repeat investors are Arch Venture Partners, of Chicago; CMEA Ventures, of San Francisco; Frazier & Co., of Seattle; Lombard Odier & Cie, of Geneva; OrbiMed Advisors, of New York; Skyline Ventures, of Palo Alto; and Venrock Associates, of New York.

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