BioWorld International Correspondent

LONDON - Cambridge Drug Discovery Ltd., a specialist in small-molecule modulators of cell signaling, raised £7.5 million (US$11.1 million) in a private placement designed to take it through to profitability in the next two years.

The financing was led by Friends, Ivory and Sime, with ABM AMRO and Mitsubishi Corp. participating. Existing shareholders include 3i, Alta Berkeley, Mayo Medical Ventures, the University of Cambridge and the UK Medical Research Council.

CEO Mark Treherne told BioWorld International, "As a services company, we already have revenues but we want to invest to develop our capabilities." The proceeds will fund a new medicinal chemistry function, advance the company's ion channel and kinase drug discovery research programs, and finance the further development of a retroviral display screening platform.

"At the moment we are purely a biology company," he said. "We have gotten some very exciting hits and need to do chemistry work to make them licensable."

Cambridge Drug Discovery, based in Cambridge, intends to partner projects early, and Treherne said the lead program in potassium channels is ready to be licensed, while a number of kinase inhibitors are at various stages of development.

"I expect to do a number of deals licensing out lead compounds for development this year," he said, adding that he expects single compound deals to be worth £5 million and upward. "Substantial preclinical deals are being done. Before, everyone tried to get to the end of Phase II but that business model is broken at the moment. I think you have to have the resources to get to Phase III, or sell early.

"Everyone knows the attrition rate is 90 percent, so unless you have the cash to take 10 things through, it is better to license 20 to 30 compounds early for a smaller return."

Treherne said pharma companies are "very avidly" looking for discovery collaborations to build their pipelines. "The issue is the quality; we have the technology to discover reliable, good quality leads."

The company also intends to expand its third-party drug discovery and outsourcing business.

Cambridge Drug Discovery was founded in 1997 and merged with Cambridge Genetics Ltd. in 2000. The company raised £11.5 million in previous funding rounds.