By Matthew Willett

Cytos Biotechnology AG raised CHF 50 million (US$32 million) in a second financing round that will be used to expand its product pipeline of protein therapeutics.

The independently managed financing adds Cytos' list of investors U.S.-based Alta Partners; Aventic, a UBS subsidiary; Health Cap, of Sweden; and the Swiss firms Lombard Odier, New Medical Technologies, and Private Equity Direct Finance, a subsidiary of Bank Vontobel.

First-round investors Global Life Science, of Germany; Innoventure, a subsidiary of Credit Suisse; and Novartis AG, of Switzerland, also participated in the second round.

And with the corresponding completion of the company's management team - Lothar Germeroth and Jakob Schlapbach were appointed vice president of business development and chief financial officer, respectively - the Zurich, Switzerland-based company said it's ideally positioned to exploit the post-genomics search for new drugs.

They join Martin Bachman, chief scientific officer, and Wolfgang Renner, CEO and president.

Cytos holds patents, or is in the process of applying for patents, for several innovations, including DELphi technology, a virus-based expression screening and production system; AlphaVaccine, an HIV vaccine in development designed around a highly ordered viral scaffold; protein manufacturing processes utilizing the application of Cyclin E, a regulatory gene to overcome the serum requirements of mammalian cells; and toxic proteins production processes using pCytTS, a system that allows for temperature-inducible expression.

The company said its DELphi technology is the most efficient in vivo genomic technology available for matching genes with their biochemical properties and corresponding protein activity.

DELphi allows reproduction of proteins from a chosen tissue or cell type. Currently, the company uses DELphi to functionally reproduce the approximately 100,000 human proteins, and it makes this pool of molecules available to high-throughput screening. Cytos plans to develop products through mid-stage clinical trials and then license or co-develop them with partners.

The company's AlphaVaccine technology was developed as a more effective protection against a wider variety of pathogens. It functions by placing an antigen on a novel non-infectious viral scaffold in vitro, creating a virus-like particle designed to induce strong B-cell and cytotoxic T-cell responses.

Cytos' protein manufacturing processes, including development of bacterial strains and eukaryotic cell lines, works with the company's proprietary pCytTS expression system, to produce proteins in the milligram per liter range.

Cytos' pCytTS system is characterized by undetectable basal level expression at 37 degrees Celsius and gene expression control at between 35 and 29 degrees Celsius. The company plans to use pCytTS system-created products through skin cell insertion, controlling transgene expression through local skin temperature regulation.

The company so far has implemented four therapeutic protein production processes for major pharmaceutical companies using the pCytTS system in conjunction with another proprietary technology, the regulatory gene Cyclin E.

A spin-off of The Institute of Biotechnology at the Swiss Federal Institute of Technology in Zurich, Cytos has operated independently since February 1995.

The company has generated more than CHF 6 million in revenues since its incorporation through protein and vaccine production processes. It received $1.6 million in research and development support from a option agreement with an undisclosed pharmaceutical company.

For its expansion, the company raised CHF 2 million from loans in 1999 and CHF 11 million in equity investments.

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