By Brady Huggett

Entelos Inc. raised $25 million in what should be its final private financing round, and said it is shedding the developmental-stage label.

¿We think this is our last private round,¿ said James Karis, CEO and president of Entelos. ¿Principally, we¿ll [use the funds] to continue to build our disease models in different disease areas. I think we are really about commercialization of the company now and less about development.¿

The $25 million should last privately held Entelos ¿several years,¿ Karis said, depending on how successful the Menlo Park, Calif.-based company is with its business model. But since the company is based on information technology and mathematical modeling, it has a relatively low burn rate.

Karis called fund raising ¿difficult¿ in the current economic environment, but said since Entelos is ¿a company that has proven technology and we have revenues and customers,¿ it showed raising cash is not impossible.

Entelos was formed in mid-1996 by five individuals: Sam Holtzman, Thomas Paterson, Alex Bangs, Cathy Moley and Jill Fujisaki. Holtzman, Paterson and Bangs were all working together at Strategic Decisions Group, of Menlo Park, when they got the idea for Entelos. They pulled in Moley and Fujisaki, and the fivesome financed operations themselves until they raised their first funds in 1998.

Entelos has raised about $45 million to date and the company has swelled to 85 employees, roughly 55 of them in research and development. Karis said the company has slowed its expansion now.

¿We doubled in the last year and a half, but we see gradual growth in terms of people from here,¿ he said.

Entelos earns revenue through deals using its main technology, PhysioLab. The PhysioLab technology is a platform for testing experiments and hypotheses in silico, predicting the results through simulation, and creating knowledge out of discovery and clinical data.

¿What we do is, we enter into research and development collaborative agreements and collaborate with our partners,¿ Karis said. ¿We build a core PhysioLab disease area, and we apply it using [the partner¿s] proprietary information, and some of our own data.¿

The result is a disease model that fits each company¿s needs. Entelos is in the process of building a disease model now with N.V. Organon, of Oss, the Netherlands, for rheumatoid arthritis, just one of the eight Entelos customers. The company also lists Johnson & Johnson, of New Brunswick, N.J., and AstraZeneca plc, of London, as customers. Karis said Entelos expects to announce at least one, if not more, agreement in the coming months.

The round was led by Bear Stearns Health Innoventures LP, of New York, with Earlybird, of Palo Alto, Calif.; equity4life, of Zurich, Switzerland; Compaq Computer Corp., of Houston; Abingworth Ventures, of London; Boulder Ventures, of Boulder, Colo.; Brentwood Ventures, of Los Angeles; Charles River Ventures, of Waltham, Mass.; and St. Paul Ventures, of St. Paul, Minn., also participating.

Concurrent to the completion of the financing, Entelos added Stefan Ryser, of Health Innoventures, and Vera Kallmeyer, of Earlybird, to its board.