By Debbie Strickland

Calydon Inc. has raised $11.9 million for development of its prostate-cancer gene therapy, slated to enter the clinic during the first half of 1998.

The private placement equity financing — enough to fund operations through mid-1999 — was the largest to date for the three-year-old Menlo Park, Calif., firm, which has now raised a total of $15.7 million.

The cash infusion will allow the company to expand its work force to about 30 employees next year from the current 17.

Previous Calydon investor Sequoia Capital, of Menlo Park, participated in the round, along with Genesis Merchant Group, of San Francisco, and Perseus Capital, of Washington. They were joined by a group of undisclosed private individuals.

Calydon's prostate cancer treatment centers on attenuated replication-competent adenovirus (ARCA), an engineered adenovirus that replicates in only one cell type, for example 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. (See BioWorld Today, July 1, 1997, p. 1; and Dec. 26, 1996, p. 1.)

The ARCA platform, according to Calydon, could be applied to any cancer for which a unique cellular marker exists, such as liver, breast and ovarian cancer.

The company has made an ARCA virus for primary liver cancer. That therapy is now undergoing animal testing.

Two factors drove the choice of prostate cancer as the initial lead indication, said Daniel Henderson, president and CEO: "The market is so large and the need is so great."

In the U.S., prostate cancer kills more than 40,000 men annually.

In experiments with mice, ARCA caused a one-gram tumor to regress to less than 20 percent its original size. Prostate specific antigen — the primary marker of prostate cancer — dropped to undetectable levels.

The company also has reported in vitro data showing that more than 400 cancerous prostate cells are destroyed for each noncancerous cell destroyed.

Though the company missed its goal of launching its lead product into a Phase I trial in 1997, "on a key business criterion we're ahead," said Henderson.

"Venture capitalists usually expect to spend $20 million before reaching a clinical trial," he said. "We will have spent $4.5 million to $5 million."

The company is "very close" to filing an investigational new drug application, with the clinical trials "targeted for March or April," Henderson said. The trials will be run in collaboration with the department of urology at the Johns Hopkins University Hospital, in Baltimore.

"Staying focused" is what's enabled Calydon to come so far with so little cash, Henderson said. Trials in one cancer indication will prove whether the company's platform technology works or not, while conserving cash.

"We have no reason to believe that if it fails to work for prostate cancer it will work for something else," he said. "We're going to see how good what we've got really is."

The company is in no hurry to partner the product. The financing bought Calydon time to gather clinical data, which, if positive, could "dramatically" drive up the therapy's value to prospective partners, Henderson said. *

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