PARIS - Diatos, a Paris-based biotechnology start-up founded in February 1999, is close to closing its first funding round, which will net it "at least" EUR15 million (US$13.5 million), its newly appointed chairman and CEO, John Tchelingerian, told BioWorld International.

The company had been in negotiations with American, European and French venture capitalists since March, he said, and would finalize the agreement by the end of October. Tchelingerian stressed that the U.S. funds involved would be making their first ever investments in the European biotechnology industry.

Diatos is a spin-off from the Institut Pasteur, a Paris-based, semi-public medical research establishment. It was founded by Stratis Avram and Thirhse Ternynck, the inventors of its core technology, and John Hawken, a manager with considerable experience of getting biotech start-ups off the ground. Its seed capital of EUR1.5 million was provided by the French venture capital fund Sofinnova Partners.

The company is developing products for the treatment of cancer and infectious diseases using a proprietary system of intracellular and intranuclear drug delivery based on the use of penetrating peptides and antibodies. The company is best known for developing the Elisa enzymatic test, which is widely used for the detection of the AIDS virus. Tchelingerian said it was developing some products under license from the Institut Pasteur but had filed a number of patents of its own over the past 18 months.

Once the current funding round is closed, the company's strategy is to push ahead with the preclinical development of a number of products with the aim of taking the first into clinical development by 2002. Tchelingerian said he wanted to maximize the value of Diatos' product portfolio before concluding collaboration agreements with pharmaceutical companies. Diatos would undertake Phase I clinical trials itself and then team up with a pharmaceutical partner for the following phases, he said. Tchelingerian is in no hurry to conclude collaboration deals, therefore, and while acknowledging that he was already talking to several companies, said he could not say when an agreement might be signed.

Tchelingerian is a specialist in neuro-immunology and cell therapy and holds a doctorate in neuroscience from the University of Paris. He joined Diatos as managing director in October 1999, after helping to found Neurotech S.A., now based in the Paris suburb of Evry, in 1995. He was development director of the company from 1997 to 1999 and remains on the board.

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