BORNHEIM, Germany ¿ Switch Biotech AG raised EUR18 million (US$16.4 million) in its third financing round. The money will fuel exploration of the company¿s drug targets and help drive them into clinical trials.

Switch, of Martinsried, Germany, focuses on finding and validating targets for treatment of skin diseases.

¿The current funding gives us the opportunity to turn from a research company into a development company in the field of skin therapies,¿ the company¿s chief scientific officer, Andreas Goppelt, told BioWorld International.

Switch identifies gene targets by using commercially available biochips and proprietary technologies.

¿For target validation we use the harshest criteria that can be set,¿ Goppelt said. The company tests genes to be validated in animal models for therapeutic effects.

¿Some of the animal models are proprietary to Switch,¿ he said. Company researchers, for example, transplant human skin to animal models, and thus can conduct human skin trials using ¿the most sophisticated animal models.¿

Switch has a collaboration with Eckhard Wolf of Munich University, who is ¿one of the leaders in generating new and proprietary animal models ranging from transgenic to certain knockout animals,¿ Goppelt said. ¿These include rodents and pigs. Pig skin most closely resembles human skin and therefore represents the most appropriate animal model for human skin.¿

Switch has validated two targets in the field of wound healing, Goppelt said, adding, ¿These genes encode for soluble proteins, which will be developed into therapeutic entities. We intend to drive those proteins into clinical development on our own.

¿In other projects we¿d like to enter into early research collaborations,¿ he said. In the fields of atopic dermatitis and psoriasis the company has identified and verified several targets.

Related to those targets and others to be found, Switch in June signed a collaboration agreement with Leo Pharmaceutical Products Ltd. A/S, of Ballerup, Denmark. The agreement formed the basis of a long-term collaboration valued at up to EUR25 million, including up-front payments, fees for service and potential milestone payments, as well as royalties on resulting products.

¿We intend to have a second deal in the same financial range,¿ Goppelt said. Such an agreement would allow Switch to cover its internal costs for drug discovery and generate significant income, he said. ¿That would be the basis then for our own product development in the field of chronic wounds.

¿Our strategy is to be a financially sound company that conducts product development.¿

Switch focuses on skin because there is a high unmet medical need in this field, it said. In addition, topical application makes product development easier than for drugs.

Goppelt said Switch is in a strong position. ¿There is no other biotech company that combines a clear focus on skin with the technological breakthroughs of functional genomics,¿ he said.

Investors in the financing round were the Swiss company NMT New Medical Technologies, of Schaffhausen; Mulligan BioCapital AG, of Hamburg; and Landeskreditbank Baden-W|rttemberg-Fvrderbank, of Karlsruhe, Germany. They joined investors including 3i Group Investments LP, of London; Strategic European Technologies NV, of Heiloo, the Netherlands; Technologieholding Funds VC GmbH, of Munich; DVC Deutsche Venture Capital, of Frankfurt; BdW Beteiligungsgesellschaft f|r die deutsche Wirtschaft mbH & Co. KG, of Frankfurt; private investor Hellmuth Kirchner, of Munich; and tbg, of Bonn.

In two previous financing rounds Switch raised EUR10.6 million.

Switch started operations in January 1998. It currently employs a staff of 65.