By Mary Welch

Needing funds to advance development of its two lead products, which are designed to stimulate immune responses against diseases, Xcyte Therapies Inc. raised $12 million in a placement of preferred stock.

"Our target was $12 million," said Ron Berenson, president and CEO. "We met it and basically stopped looking [for more money]. This should fund our product development programs for the next few years. Eventually we'll do an [initial public offering], but there's no plan to raise any additional funds in the near future."

New investors included Vulcan Northwest of Bellevue, Wash.; Falcon Technology Partners, of Philadelphia; and Fluke Capital Management and Tredegar Investments, both of Seattle. Existing investors who participated in this round are Alta Partners, of San Francisco; The Sprout Group, of Menlo Park, Calif.; Sofinnova, of San Francisco; and ARCH Venture Partners, of Chicago.

The company's first product involves a treatment with ex vivo activated T cells. T cells, an integral part of the body's immune system, are isolated from the blood, activated and returned to the body. Early clinical evidence has shown the activated T cells may have the potential to treat both cancer and infectious diseases, including HIV.

The treatment is in physician-sponsored Phase I studies that started last year, but Xcyte expects to begin its own Phase I trial in late 1999. The company's clinical study should last from six to nine months, Berenson said.

In addition, Xcyte is developing drugs that target cell surface receptors in an effort to rally immune system attacks. "It's a novel technology and it allows us to bind receptors in a unique way," he said.

Based on this technology, the company is developing a product targeting two key T cell receptors, CD28 and CD40, which play roles in regulating immune responses.

Xcyte, of Seattle, was founded in 1997 by the merger of CDR Therapeutics, of Seattle, and CellGenEx Inc., of Chicago, with the goal of finding antibody-based treatments for immune system disorders, infectious diseases and cancer. (See BioWorld Today, Sept. 30, 1997, p. 1.)