By Lisa Seachrist

Washington Editor

Readying to start its first gene therapy trial, UroGen Corp. raised $17 million in a private placement with a single investor.

The San Diego-based company sold 2 million shares of common stock at $8.50 a share to the Aries Funds. UroGen CEO Robert Sobol told BioWorld Today the shares were sold very close to the prevailing market price of the stock when the two parties agreed to the deal.

UroGen will use the funds to bring its lead gene therapy candidate for the treatment of hemophilia A into the clinic in collaboration with Baxter Healthcare. The company also is developing a gene therapy approach for the treatment of prostate cancer.

"We expect to start the clinical trial in the second half of the year," Sobol said. "We have an agreement with FDA to also present the protocol to the [Recombinant DNA Advisory Committee (RAC)] for review and approval before we proceed in patients."

Hemophilia A is a bleeding disorder that results from a deficiency in the clotting protein Factor VIII. UroGen intends to correct that deficiency by inserting the full-length copy of the Factor VIII gene into liver cells.

"Hemophilia A is a particularly good target for gene therapy because if you can restore just 5 percent of the normal levels of clotting factor you can have a clinically meaningful effect," Sobol said.

In order to deliver the gene to liver cells, UroGen will use a "gut-less" adenoviral vector. This vector allows the company to deliver relatively large fragments of DNA into the target cells. UroGen bought the rights to this technology from Baxter, of Deerfield, Ill., in 1998.

The gutless adenoviral vector approach not only allows the company to deliver large amounts of DNA but also effectively circumvents some of the problems associated with using adenovirus as the delivery agent for gene therapies. Because adenoviral replication causes the immune system to kill infected cells, most adenoviral vector gene therapies are guaranteed to be short-lived. In addition, immune system activity against large amounts of adenovirus can cause a systemic immune reaction, such as disseminated intravascular coagulation. University of Pennsylvania gene therapy patient Jesse Gelsinger appears to have died as the result of an inflammatory reaction caused by the adenoviral gene therapy vector he was given.

UroGen's approach avoids infecting liver cells with adenovirus by employing a system involving helper virus and a packaging cell line. The gene therapy product delivered wears the coat of the adenovirus in order to gain entry, but contains no adenovirus genes and, therefore, causes no infection. As a result, cells harboring the gene therapy construct are invisible to the immune system, allowing them to be long-lived and unlikely to cause the inflammatory reaction caused by adenovirus.

The company will make a presentation on the technology to the RAC in March and will have its protocol reviewed at a later date. When the clinical trial begins, the company plans to use three different medical centers.

UroGen's stock (OTCBB:UROG) closed Thursday at $10.125, down 25 cents.