Dynavax Technologies Inc. raised $34.8 million in a private placement of Series D preferred stock, money that will be used primarily to fund its program in ragweed allergy immunotherapy.

Chief Financial Officer Andrew Gengos said the privately held company began its fund-raising quest last June to finance its programs focused on allergy, inflammation-mediated diseases, infectious diseases and cancer.

“It’s difficult to raise money since the biotech sector has gone down,” Gengos said. “A lot of mezzanine investors are really holding their money, but that said, we did get financing.”

Gengos said the company is pleased that it was able to interest “impressive investors,” which he said validates its work.

Berkeley, Calif.-based Dynavax had filed for an initial public offering in December 2000, aiming to raise $75 million, but withdrew it last April. Gengos said his compnay should be poised to capitalize when the market improves due to the maturity of its pipeline.

“We believe if the IPO market emerges with even average strength, our company would be favorably received in the public market,” Gengos said.

Dynavax’s lead drug candidates an immunotherapy for ragweed allergy and a hepatitis B vaccine are based on its immunostimulatory sequences (ISS), which are short DNA sequences designed to enhance the ability of the immune system to fight disease and prevent inflammation. The company is about to be in the position of having five ongoing trials this year.

“Basically, we have four clinical programs right now,” Gengos said. “The one that’s consuming the most money is ragweed allergy immunotherapy.”

That program is in Phase II studies, with a pivotal Phase III scheduled for 2003. The company also will begin a Phase I trial in asthma in May for the pulmonary delivery of ISS.

“We would like to partner asthma, but we feel we can take it through Phase II,” Gengos said.

The hepatitis B program is for a prophylaxis vaccine. Dynavax completed Phase I/II trials, with results so favorable that it will begin a pivotal trial this year that technically will be a Phase II, Gengos said. There are plans to move into a Phase III trial next year.

The company is still partnered with Triangle Pharmaceuticals Inc., of Durham, N.C., for that program, Gengos said, although Triangle is more interested in hepatitis B from a therapeutic perspective, a program that is scheduled to enter the clinic next year.

In cancer, Dynavax recently initiated a Phase I trial using its technology in combination with San Diego-based IDEC Pharmaceutical Corp.’s Rituxan for non-Hodgkin’s B-cell lymphoma. A Phase II is planned for next year.

“We don’t see [that program] as a huge consumer of resources,” Gengos said, explaining that Dynavax has “some very interesting endpoints” associated with the trials and that there is a “good chance that we will emerge from the trial saying we have good information and, Let’s move forward.’”

Dynavax has studies in earlier-stage vaccines, which use the company’s technology in a different way.

“Instead of a monoclonal, it’s a tumor antigen,” he said.

Dynavax is collaborating with Aventis Pasteur, of Lyon, France, to look at ISS technology for possible use in Aventis vaccines, specifically those for HIV.

Care Capital LLC, of Princeton, N.J., led the financing, which included new investors Piper Jaffray Ventures, of Minneapolis; Bioveda, of Redwood City, Calif.; HealthCap, of Stockholm, Sweden; and Lotus Bioscience Holdings, of Hong Kong.

Existing investors that also participated were Forward Ventures, of San Diego; Sanderling, of San Mateo, Calif.; BA Ventures, of Foster City, Calif.; WestLB Asset Management, of Los Angeles; JAFCO, of Tokyo; Alta Partners, of San Francisco; InterWest, of Menlo Park, Calif.; Axiom Venture Partners, of San Francisco; and Finedix, of Paris.

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