By James Etheridge

BioWorld International Correspondent

PARIS ¿ Neurotech SA, which is developing cell-based therapies for diseases of the eye and the central nervous system, raised EUR35 million (US$30 million) in what it described as a ¿pre-IPO¿ funding round.

Neurotech CEO Tom Shepherd said, ¿This level of funding in the current climate is a clear endorsement of Neurotech¿s technology and business strategy.¿ He told BioWorld International that the company now had ¿sufficient funding for three years, which should give us time to catch a window for an IPO.¿ In its two earlier funding rounds, the company raised US$3 million in April 1997 and US$14.5 million in November 1998.

The therapies being developed by Neurotech, which is based in France¿s national biotechnology science and business park at Evry, use genetically modified cell lines derived from the eye and the CNS, either in encapsulated form as a means of delivering proteins to specific sites over long periods of time, or directly as a cell therapy for replacing damaged cells. The company said that, by allowing the continuous local production and release of therapeutic molecules from living cells following a single administration, cell therapy, either encapsulated or naked, overcomes the problems associated with regular injections of drugs into the brain or the eye.

The efficacy of its Encapsulated Cell Technology (ECT), to which Neurotech purchased the industrial property rights from CytoTherapeutics Inc. in January 2000, was demonstrated last year in tests on animal models of retinitis pigmentosa. The tests also established that the company could successfully produce implants to GMP standards and manipulate them in vivo with no ill effects. Shepherd said this therapy for retinitis pigmentosa would enter clinical development in the U.S. early in 2002.

Neurotech also has completed preclinical trials of a therapy for age-related macular degeneration, and Shepherd said clinical trials of that would start later in 2002. They will take place in Europe, either in France or the UK. The company also is developing a therapy for neovascular diseases of the eye.

These are now its three main priorities, Shepherd said, since it has put development of its lead compound, NCT-121, on hold. A Phase I/II trial of NCT-121, a cell therapy for the treatment of glioblastoma, began in Grenoble, France, in April 2000, but the product utilizes xenogenic cells and in view of the concerns surrounding xenotransplantation and other medical uses of animal tissues in the U.S., Neurotech has decided to ¿wait and see the outcome of the debate before deciding whether to go further¿ with the development of NCT-121. Meanwhile, Shepherd added, it was developing an alternative human cell line as a backup.

The joint lead investors were Merlin Biosciences, of London, and Apax Partners France, which each invested EUR10 million. Other new investors were Westdeutsche Landesbank Girozentrale (Germany), ABN Amro (the Netherlands) and Paris-based Rothschild and AGF Innovation. The company¿s existing shareholders ¿ 3i plc (London), GIMV (Antwerp), Atlas Ventures (Paris), CDC Innovation (Paris), Sofinnova Partners (Paris), Sudinnova (Lyon), Banexi (Paris), Banque de Vizille (Lyon), Private Equity Holdings AG (Zug, Switzerland) and IMH (Hannover, Germany) ¿ also participated in this funding round.

Merlin Biosciences and Apax Partners have become Neurotech¿s largest single shareholders and both now have representation on the company¿s board.

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