By Mary Welch

Digital Gene Technologies Inc. (DGT) raised $22 million in a private placement of equity securities that will be used to accelerate use of its automated assay technology as well as advance its bioinformatics and proprietary databases.

"We were looking for about $8 million, then raised it to $15 million and then to $22 million, which is just north of 10 percent of the company," said Robert Sutcliffe, DGT's president and CEO. "It's a rather dramatic jump, but not a surprising one given this market now."

The self-managed financing round involved both current shareholders as well as new investors to the private company. Since its inception in late 1995, the La Jolla, Calif.-based company has raised more than $34 million through three rounds of financing.

"Our business model has always been conservative and the technology is totally automatic and relatively inexpensive to run," Sutcliffe said. "We've not seen a real need to raise a substantial amount of money when we can build the company and get to the front line of gene expression without it."

Acknowledging that several biotechnology companies are completing initial public offerings (IPOs), Sutcliffe said DGT will take advantage of a "strategic opportunity over the next several months. An IPO for us would be a strategic opportunity rather than a financial opportunity. Our existing collaborations are lucrative. We have managed to take the company this far and are well funded by private investors. Now, however, that the larger markets are interested in genomics, it may be a large opportunity for us."

Total Gene Expression Analysis (TOGA) is DGT's method of identifying and determining the concentration of nearly all of the genes active in a sample cell or tissue. The method provides an inventory of gene activity in a sample and helps to define the function of the vast array of genes comprising any genome.

"TOGA is the only technology that sees all the genes in a cell or tissue at the same time," Sutcliffe said. "Chip technology can see known genes expressed in tissue but it can't see novel genes and rarely expressed genes often. TOGA can see novel and known genes. It can compare gene expression changes over a timed course of action or as drugs are administered or as a disease develops. TOGA lets the tissues speak for themselves. It is the most sensitive [technology] and sees the most things."

The company recently signed a deal worth up to $93 million with Immunex Corp., of Seattle, under which Immunex will use the TOGA system to process cell line samples and hopefully develop three target molecules in the field of gastrointestinal inflammation. (See BioWorld Today, Dec. 3, 1997, p. 1.)

To date, Immunex has licensed more than 50 TOGA-identified molecules from DGT in the first 20 months. The collaboration was recently renewed for a third year.

DGT has its own internal program, a brain anatomy project, in which company scientists have successfully used TOGA to identify several structure-specific genes of the hypothalamus, the hippocampus and the cerebral cortex. The program was extended to the total expression profiling of the striatum, amygdala, thalamus, cerebellum and olfactory bulb, which provides a complete picture of gene expression by region throughout the brain, the company said.

This project should form the basis of commercial collaborations designed to explore the roles of the newly discovered genes in structure-specific brain functions, such as learning, memory, appetite and sleep, as well as brain region-dependent pathologies such as Alzheimer's disease, schizophrenia and addiction.

The industry has responded well to DGT's technology, Sutcliffe said. "There are a number of additional commercial partnerships under negotiation."