By Mary Welch

In its largest funding to date, Maxia Pharmaceuticals Inc. is raising $20.5 million through the sale of Series B preferred stock and convertible debt, with the proceeds being used to complete the development of MX6, which now is in Phase III trials.

"This is what we wanted to bring in - about $20 million," said Magnus Pfahl, the company's chairman, president and CEO. "It should allow us to develop MX6 and bring other programs from the preclinical state to the clinic. This money alone should last us 24 months."

The placement actually is in three rounds, all of which will be closed by year's end, he said. The initial closing was for $10.25 million, with Bay City Capital BD LLC, of San Francisco, acting as placement agent. The investors included lead investor AP Asset Management AG, of Zurich, Switzerland, and Bay City Capital. The company has raised nearly $40 million since its founding five years ago.

"I think the investors were attracted to us because of our broad technology base," Pfahl said. "We have promising programs in several major disease areas, such as Type II diabetes, cancer, inflammation, osteoarthritis, rheumatoid arthritis and heart disease."

MX6 incorporates a class of chemicals called retinoid-related molecules, shown to selectively target and kill a range of cancers in laboratory and animal models. It is in Phase III trials for the treatment of high-grade cervical intraepithelial neoplasia (CIN) and in Phase II trials for low-grade CIN. The Phase III trial involves 140 women at six U.S. clinical sites and compares MX6 to placebo. CIN is a condition that can lead to cervical cancer.

Also called cervical dysplasia, CIN usually is detected in a Pap smear, followed by a colposcopy and biopsy. High-grade CIN always involves surgery, while women with low-grade CIN have a wait-and-see option.

"There is a 30 percent chance that it will become cervical cancer with low-grade CIN," Pfahl said.

More than 2 million women each year are diagnosed with various grades of CIN, and about 700,000 women require surgery.

Maxia's product is a gel topical treatment that is applied via timed release over 14 days.

"MX6 will be the first medical treatment for this condition that is topical rather than invasive," Pfahl said.

The San Diego-based company expects to have results on the Phase III trial by the end of the year, with a new drug application filing sometime next year, he said. A European Phase III trial is under way as well. MX6 should enter Phase III trials for the low-grade condition next year.

In addition to MX6, Maxia completed a Phase I study of MXC3255, a novel insulin sensitizer for the treatment of Type II diabetes, and selected MX6054, the lead second-generation compound, as a candidate for clinical development. It also plans to initiate clinical development of a more potent apoptosis inducer for the treatment of non-small-cell lung cancer, prostate cancer and breast cancer by the end of the year.