Staff Writer

LigoCyte Pharmaceuticals Inc. has finalized an agreement for a $28 million Series C financing round that will fund development of the company's two lead vaccines against norovirus and influenza.

The Bozeman, Mont.-based vaccine developer's product pipeline centers primarily on its virus-like particle (VLP) and monoclonal antibody technologies, which have potential use in gastrointestinal and respiratory indications. By preserving the authentic conformation of the viral capsid, VLPs mimic the functional interactions of the live virus, while lacking the ability to reproduce or cause illness.

The financing comes as the company is finishing a Phase I study of the norovirus vaccine. The study, conducted at the University of Maryland Medical Center, aimed to assess the safety and immunogenicity of the intranasally delivered, dry powder vaccine in healthy adults. Ligocyte next plans to initiate a live-virus challenge trial of the vaccine in human volunteers.

Norovirus, commonly known as the stomach flu, is the leading cause of infectious gastroenteritis in the U.S. and other developed countries. More than 23 million Americans are affected by the virus annually.

Outbreaks in hospitals, nursing homes and schools have become increasingly frequent, and LigoCyte Chief Operating Officer Robert Goodwin noted the serious complications that the highly infective virus can present in community health centers. "Many people with the virus go to the emergency room, but it's particularly hard to clean traces of the virus from those environments. And for patients on multiple medications or patients with renal failure, the virus can be a tipping point," he said.

Goodwin told BioWorld Today that the norovirus vaccine was the key driver for investors in the Series C round, particularly as the virus becomes more prevalent. "What we've seen is that the virus is becoming more of a widespread problem. It's a significant medical need that should be addressed," he said.

He added that LigoCyte benefits by being first out of the gate in developing a vaccine for the stomach flu. "We have the only vaccine in clinical trials. No one else has figured out an effective way to cultivate norovirus in vitro."

Goodwin also pointed out that the vaccine offers convenience and flexibility that makes it compatible with other seasonal vaccination programs. "It fits within the paradigm of how vaccines are used in the U.S.," he said.

Indeed, that ease of integration was not lost on government funders. LigoCyte secured the bulk of its preclinical funding for the vaccine from the Department of Defense. "That funding let us take the norovirus into clinical trials," Goodwin said. "We've been very lucky to have had access to that nondilutive funding."

In addition to using the Series C funds to develop the norovirus vaccine, LigoCyte plans to further develop its influenza vaccine. In May 2007, the company presented results of preclinical studies of the vaccine, showing that immunization with its influenza H1N1-VLP formulation resulted in 100 percent protection against both H1N1 and H3N2 influenza.

LigoCyte also has produced influenza VLPs that carry H3N2 and H5N1 antigens. H5N1 is the avian flu subtype currently circulating in bird populations. The Series C tranche will aid the company in moving its influenza vaccine candidate into human clinical testing.

LigoCyte's influenza vaccine is unique in that it offers protection against multiple strains of the virus. Existing influenza vaccines target hemagglutinin antigens, which are frequently changing. Because the vaccines are manufactured in advance of influenza outbreaks, they often are ineffective against new virus subtypes. Goodwin said that LigoCyte's vaccine has the capability of broader virus protection, as well as potential for streamlining influenza vaccine manufacturing.

The private equity investment should help push both of the vaccines forward in the pipeline and diversify the company's funding sources.

The round was led by Forward Ventures, JAFCO and Novartis Venture Fund, with significant participation from Fidelity Biosciences and MedImmune Ventures. Additional investors include Athenian Venture Partners and MC Life Sciences Ventures. Seaview Securities served as the placement agent for the transaction.

In other financings news:

• Living Cell Technologies Ltd., of Melbourne, Australia, said it has received $6 million for the placement of 24,150,408 ordinary shares, at a price of A$0.29 per share, as approved by shareholders at a general meeting held March 7. That resulted from the exercise of an option attached to the $2 million investment in the company made by NaviGroup Management Ltd., as announced Jan. 8. Those funds, together with the private placement of A$6 million announced Nov. 30, and the previous investment in LCT by NaviGroup, bring the total of recent capital raised by LCT to more than A$15 million.