BORNHEIM, Germany - Epigenomics AG, of Berlin, raised EUR28M (US$24M) in its second financing round. According to Oliver Schacht, the company's chief financial officer, more than half of the money will be used for R&D. The rest shall mainly be used for extension of business infrastructure and completing patent portfolio, Schacht said.

"We use the fifth genetic letter for our work", said CEO Alexander Olek. He explained: "It is methylated cytosine. Methylation pattern shows us whether a gene is switched on or off." Epigenomics AG identifies expression of genes by reading their methylation pattern. According to Olek, this enables not only finding genes that could be causing disease, but finding direct correlation between switched genes and what they mean for disease. The Epigenomics researchers do such investigation by MALDI-TOF mass spectrometry, several algorithms and DNA chips specially designed for this purpose. "We can test several hundred genes by one chip. If it detects methylation, there are fluorescence signals," Olek said.

"Part of the money from the new financing round [will go to] making the chips more efficient and cheaper. We also take the money for proof-of-principle studies, such as comparing our methods with conventional expression analysis in diabetes or cancer research," he said. Although covering its technologies broadly by patents, Epigenomics wants to make its patent coverage still more waterproof, he added. Epigenomics also intends to check all human tissues, healthy and sick, for their methylation patterns. "We want to make methylation fingerprints of healthy vs. sick tissues," Olek added.

"Wherever expression analysis is used, this could also be done by our technique. We'll find out for which diseases and applications it performs best," Olek said, outlining the basics of the company's sales strategies. As examples he mentioned clinical trials with needs for huge screening and target-finding genetic diseases. "We want to cover such applications by cooperations with big pharma starting next year," he said, adding that details could not be disclosed at the moment.

Epigenomics, which was founded in January 1999, has about 60 employees. Money from the financing round also will be used to improve business infrastructure. "We'll establish distinct units responsible for business development, personnel, accounts and public relations, etc.," Olek said. The company also announced plans for expansion in the U.S., with a business site to be established there in the first half of 2001.

According to Epigenomics, participants in the recent financing round included existing investors such as Deutsch Venture Capital Gesellschaft (DVCG), along with a number of new investors from the international investment community, including MPM Asset Management, of Cambridge, Mass.; 3i, of London; and Abingworth Management, also of London. In the previous round, the company raised about EUR10M, including about EUR3M of grants by the European Union and the German ministry of research.