By James Etheridge

BioWorld International Correspondent

PARIS - The French-American company DrugAbuse Sciences (DAS) raised $22.4 million privately from a group of European investment funds to further develop its compounds to treat addictions.

The company's founder and chairman, Philippe Pouletty, said "this is the biggest funding round ever completed in the biotechnology sector in France, one of the largest ever in Europe," and one of the largest this year in the U.S.

"Based on the discoveries of the last 10 years that addictions are chronic neurological diseases we believe we can build a strong pharmaceutical company which will make a difference in the lives of millions of alcohol and drug addicts," Pouletty said.

He added that the company had been seeking to raise no more than $12 million to $15 million, but found that venture capitalists were prepared to put up as much as $25 million. He settled for $22.4 million, he said, because "that is the amount necessary for completing the development of our first medicine."

The operation puts a value of about $58 million on the company, which says it is planning to seek a stock market listing toward the end of next year. Market conditions will dictate, Pouletty said, whether DAS is taken public in Europe or the U.S. The company, based in Paris and Menlo Park, Calif., has about equal operations in each country.

The investors include three existing shareholders: Partech International, CDC Innovation and La Financihre de Brienne, which had injected about $5.7 million into the company in its first funding round in 1997, and seven newcomers: 3i, ABN-Amro, Auriga Venture, Nomura, Parnib, Sociiti Ginirale Asset Management and Rothschild Asset Management. Together, these 10 institutions now hold a 39 percent stake in the company, while Pouletty retains 20 percent.

Pouletty founded the Franco-American company in 1995. It is developing drugs to treat alcohol dependency and drug addiction. It regards alcoholism and drug addiction as "chronic neurological diseases that can benefit from medical treatment, rather than psychosocial problems."

Pouletty also is chairman of SangStat Medical Corp., of Fremont, Calif., and previously was its CEO also. He said DAS, like SangStat, is very much product and market focused. The company's chief financial officer is Liz Greetham, and Stan Kaplan, formerly of Hoffmann-La Roche Inc., in Nutley, N.J., is president. Don Wesson is vice president of clinical development.

Its lead compound, Naltrel, is a slow-release version of Naltrexone, a heroin antagonist used for treating both drug abuse and alcoholism. It is currently undergoing pharmacokinetic clinical trials in the U.S. and the company hopes to have it on the market by 2001. Next year, DAS plans to start clinical trials of a second compound, COC-Ab, an antidote for treating the effects of cocaine overdose, and is hoping to obtain regulatory approval for it by 2002. Its medium-term financial target is to attain break-even in 2002 or 2003.

Pouletty explained that the $22.4 million would be used not only to fund the company's ongoing research and development program but also to establish a sales and marketing force. DAS plans to market its products itself, an aspect of its business strategy that Pouletty was keen to stress.

"Biotechnology companies that limit themselves to research and development are making a mistake," he said. "You don't build a large company with royalties."