By Mary Welch

Calydon Inc. raised $10.1 million in a private round of financing to fund Phase I/II trials of a second-generation prostate cancer virus.

"We had a virus, CN706, in Phase I trials for prostate cancer," said Daniel Henderson, president and CEO of Claydon. "But in the meantime we came up with a second-generation virus that's 1,000 times better than the one in the clinic. We felt compelled to accelerate its development, take it to the clinic and potentially replace CN706 with it.

"We changed our corporate strategy and went to our board. They said that all systems were go as long as we went out and raised the money. We got the money and now we're doing it."

The funding came mostly from current investors, including Sequoia Capital, of Menlo Park, Calif. Barr Rosenberg, chairman of AXA Rosenberg Group, of Orinda, Calif., was the lead investor. Calydon, of Sunnyvale, Calif., "had to put a cap on the amount of money raised," Henderson said.

Calydon's product consists of a prostate-specific gene incorporated into an attenuated adenovirus, creating an attenuated replication-competent adenovirus (ARCA). ARCA is an engineered adenovirus that replicates in only one cell type, such as prostate epithelial cells. Genes that function only in those cells are inserted at specific loci in the virus' genome. When the adenovirus enters the target prostate cells, it begins to replicate, churning out thousands of offspring.

Soon the prostate epithelial cells - both cancerous and healthy - explode with virus, releasing thousands of copies to infect other prostate cells. The process is repeated until the prostate epithelium is destroyed, along with any other cancerous cells it might contain.

Calydon's approach is to destroy all of the prostate's epithelial cells, instead of just the cancer cells. The underlying strategy is that it not only wipes out cells that already are cancerous, it eliminates the possibility that other cells might turn malignant. (See BioWorld Today, July 1, 1997, p. 1.; and Dec. 26, 1996, p. 1.)

The original virus, CN706, entered Phase I trials with 30 patients with localized prostate cancer who had failed radiation therapy. The trial is under way at Johns Hopkins University Hospital in Baltimore, and should be "wrapped up shortly," Henderson said.

The company met with the FDA about the new virus, CV787, and the agency gave its approval for new Phase I/II trials that "allowed us to pick up at the efficacy point," Henderson said. "We don't have to start all over, which helps. The fact that this new virus is less toxic with fewer side effects played a role in the FDA's decision. In this case, everyone wins."

The new trial should start within weeks at Johns Hopkins; Stanford University in Palo Alto, Calif.; Wayne State University in Detroit; and the University of Wisconsin in Madison.

The patient population will be the same as the current trial, but by year's end the company hopes to be able to treat patients with the "whole spectrum of prostate disease," including those who failed the two other primary treatments, surgery and brachytherapy, Henderson said.

Founded five years ago, Calydon has raised a total of about $25.8 million to date. The current round should last through mid-2000, about the same time the clinical trials should be finished, Henderson said. "After that, well, it really all depends on how well it [the virus] works," he said. "We all know the options and we're not prejudging any of them. This is results-driven and we'll be trying to drive the best deal."

The company also has a virus, CV790, in the preclinical stage for liver cancer, but Calydon doesn't intend to take it into Phase I without a partner, particularly for Asia.

"Prostate cancer is a big problem in this country, and liver cancer is bigger in Asia," he explained. "We need a partner who will help us develop it and market it in Asia."

The privately held company, however, believes its ARCA platform could be applied to any cancer for which a unique cellular market exists, such as liver, breast and ovarian cancer.