By Mary Welch

Inhibitex Inc. raised more than $15 million in a Series C financing round of convertible preferred stock, the proceeds of which the company will use to move forward with its clinical programs, including SA-IGIV, which now is in Phase I/II trials for the prevention and treatment of Staphylococcus aureus infections.

"We're elated," said William Johnston, Inhibitex's president and CEO. "This represents a significant step up for us from being a regionally funded company to a nationally funded company with Blair Capital. It moves us to a whole new level."

Inhibitex, based in Alpharetta, Ga., began with about $500,000 in start-up money supporting two academic researchers. Its Series B financing came in two rounds that took place in 1997 and 1998 with regional investors such as Alliance Technology Ventures and Cordova Partners, both of Atlanta, and Austin, Texas-based The AM Fund.

"We've now raised $20 million and this round is really a critical step for us," Johnston said. "It'll help sustain us as we go forward. We also will be able to open the doors for other comparable investors who want to come in with a mezzanine round of financing."

The round was led by Chicago-based William Blair Capital Partners VI LLC. Arda Minocherhomjee, managing director with William Blair, joined Inhibitex's board of directors.

In addition, two new investors - Pacific Horizon Investors, of Seattle, and Oakwood Medical Investors, of St. Louis - also participated, as did Alliance Technology, Cordova Ventures and The AM Fund. Johnston expects the financial infusion to last until the second half of next year.

The investors were attracted to the company for several reasons, Johnston said.

"I think they considered that we went from being a two-person virtual company to a research and development company with a product in the clinic in 26 months," he said. "That shows that we can move the company forward. They also were impressed that we will be filing an amendment to our IND [investigational new drug application] for a second indication. We also are building, filling out our team. We just added a vice president of clinical and regulatory affairs. We're beginning to look like a more complete company."

Johnston declined to give details about the second indication other than to say it will be will be for patients in a hospital setting who are not on dialysis.

"I also think that we're attractive because of the space we have defined ourselves with," he said. "We are developing antibiotic treatments for bacterial and fungal infections. There are not a lot of others going after this and there is a huge opportunity."

A private company, Inhibitex has one product in Phase I/II trials. The trial, which will enroll 30 patients, will be completed by year's end. A second full-blown Phase II trial will start this year as well.

SA-IBIV (S. aureus immune globulin intravenous) is an antibody preparation for the prevention and treatment of S. aureus infections in a hospital setting. It is aimed at high-risk patients: diabetics, intravenous drug users, patients undergoing hemodialysis, low-birth-weight neonates, surgical patients and people with AIDS. It is a purified immunoglobulin G product derived from pooled adult human plasma selected for elevated levels of antibodies specific for S. aureus.

"Another exciting development is that we're about to move forward on a second generation of this product," Johnston said. "It will replace the first generation product, in all likelihood. This financing will also help us move forward to develop this product and we expect to be in the clinic within two years."