Enobia Pharma Inc. closed a Series B financing that will bring the Montreal-based company C$40.1 million (US$38 million) over the next two years.

The funding will be paid in four milestone-based tranches, according to Enobia President and CEO Robert Heft. New investors OrbiMed Advisors LLC and CTI Life Sciences Fund led the round, which also included participation by existing investors Fonds de solidarité FTQ, Desjardins Venture Capital, Lothian Partners and T2C2/Bio 2000.

Heft said the fundraising process was "fantastic" because of Enobia's "compelling" preclinical data with its lead program, a recombinant form of the enzyme alkaline phosphatase for the treatment of hypophosphatasia.

Hypophosphatasia is a genetic disorder caused by mutations in the gene for alkaline phosphatase, an enzyme involved in bone mineralization. The condition results in growth retardation, skeletal deformities, frequent fractures and potentially death. Heft said that although one scientific paper estimated the incidence of the condition at one in 100,000, the true incidence is not known. Treatment consists primarily of surgery and splinting, with some use of bone marrow transplantation, dietary restrictions and glucocorticoid therapy, but nothing approved to treat the cause of the disease.

Enobia's enzyme replacement approach uses a formulation of the alkaline phosphatase enzyme that has been modified to specifically target the bone. In a preclinical murine model of hypophosphatasia, Enobia evaluated daily subcutaneous injections of 1 mg/kg, 2 mg/kg or 8.2 mg/kg of the recombinant enzyme for 15 to 19 days. While the 2 mg/kg dose resulted in improved health and bone mineral density for all mice, the 8.2 mg/kg dose prevented mineralization defects and restored normal growth. Notably, when the high-dose injections were continued for 52 days, the mice retained their healthy growth and appearance, while all untreated mice died within 24 days.

"We're able to have an enormous impact on the animals," Heft said, noting the strength of the mouse model for hypophosphatasia.

A Phase I trial is slated to begin in summer 2008, and Phase II trials will follow in early 2009 if all goes well. Enobia has a contract with Laureate Pharma Inc., of Princeton, N.J., to produce the enzyme for clinical trials.

The Series B financing is expected to last through Phase II. Enobia raised C$19 million in a Series A financing in early 2005.

Enobia also has an early stage program for achondroplasia, the most common form of human dwarfism, which also is caused by a genetic mutation. The program is centered on small molecules rather than enzymes.

In other financing news:

• Exelixis Inc., of South San Francisco, said it plans to sell 7 million shares of common stock based on a shelf registration statement filed Monday. The company will make an additional 1.05 million shares available to the sole underwriter, Goldman, Sachs & Co., to cover any overallotments. At Monday's closing price of $11.16, the offering could bring in $89.8 million, but shares of Exelixis (NASDAQ:EXEL) fell $1.01, or 9 percent, on Tuesday to close at $10.15. The deal is expected to close this week.

• ProMetic Life Sciences Inc., of Montreal, completed a previously disclosed financing, raising C$6.6 million (US$6.3 million) in gross proceeds. ProMetic issued about 18.9 million subordinate voting shares at C$0.35 per share. About 13.3 million of the shares were sold at C$0.35 each under an agreement with Paradigm Capital Inc. That total includes proceeds from the exercise of the overallotment option. The remaining shares were sold at the same price directly to U.S. institutional investors. Funds will be used in development of products based on the company's Mimetic Ligand technology.