A firm developing drugs based on the concept of using a virus' own replication process against it, Koronis Pharmaceuticals Inc. raised $20 million in a Series D round to support mid-stage trials with its lead small-molecule therapeutic in HIV.

The financing should "fund about six quarters of development," said Donald Elmer, managing partner at Pacific Horizon Ventures and Koronis' interim CEO, including two planned Phase IIa studies of oral KP-1461 in HIV patients, as well as final formulation work and long-term animal toxicity studies of the drug.

Earlier this week, the Seattle-based company started enrolling up to 32 patients in the first Phase IIa trial, designation KP-1461-201, to test the drug's safety and tolerability, as well as ability to reduce HIV RNA levels through a Viral Decay Acceleration (VDA) mechanism. As opposed to existing HIV drugs, such as viral entry inhibitors, KP-1461 aims to treat HIV infection by inducing "hypermutation of the viral genome, which degrades viral fitness and leads to viral extinction," Elmer said. In other words, it accelerates the virus' mutation rate past its threshold, causing the virus to collapse.

Both study 201 and the second Phase IIa trial, the upcoming study KP-1461-202, will test twice-daily doses of the drug for 124 days. The only difference is that study 201 will enroll "salvage patients" who have failed prior HAART (highly active antiretroviral therapy) and study 202 will evaluate the drug in HIV-positive patients whose disease hasn't yet progressed to the point where HAART treatment is warranted. "We're looking at both ends of the spectrum," Elmer told BioWorld Today, so those trial results "will give us some very clear evidence of the suitability of [KP-1461] as a monotherapy" in HIV.

Koronis expects to complete enrollment in the first quarter of 2008 and to report full results in the second quarter. Pending positive results, the company will move into Phase IIb dose-ranging studies, which will help form the design for a pivotal program, Elmer said.

But, even at this early stage, he added, there's a "high level of enthusiasm" for KP-1461, which, in preclinical studies demonstrated the ability to cause extinction of the virus through VDA. "If clinical trials demonstrate that, too, the commercial implications could be very significant." Specifically, Elmer said, it could defer the start of HAART treatment for many HIV patients, and put a major dent in the antiretroviral market.

And, in the area of drug resistance, the bane of HIV treatment, Koronis' therapeutic so far has shown no evidence that it provokes resistance, Elmer said.

KP-1461 is the first compound to emerge from the VDA platform - the company is preparing to advance a second compound to target hepatitis C virus - and Koronis retains all rights to the program. Once results from the Phase IIa studies are in hand, it plans to continue "ongoing discussions with pharmaceutical partners," Elmer said. "We'll also take a look at the capital market alternatives as well."

Pacific Horizon Ventures, of Seattle, led the Series D round, joined by Asset Management Co., of Palo Alto, Calif. To date, Koronis has brought in about $41 million.

In other financings news:

• Bioxel Pharma Inc., of Ste-Foy, Quebec, entered an engagement letter with Paradigm Capital Inc. to raise up to C$8 million (US$7.5 million) in aggregate gross proceeds through an offering of units, each comprised of one common share and one half one common share purchase warrant. The company has not yet determined the exact number of units to be offered or unit price. Net proceeds from the offering will support commercialization, product development and working capital. Paradigm will act as lead agent and Laurentian Bank Securities Inc. will be part of the syndicate. Bioxel develops taxane pharmaceutical ingredients, which are used in cancer and other diseases.

• Ceapro Inc., of Edmonton, Alberta, completed a $2.7 million private placement for net proceeds of $2.5 million. The company issued a total of 8.7 million common shares and 4.3 million warrants entitling the holder to purchase one common share priced at 45 cents until February 2009. The company will use the proceeds to increase sales and marketing activities, support new product research and development, fund additional capital equipment expenditures and for general working capital needs. Northern Securities Inc. acted as lead agent in connection with the offering, and on the closing of the transaction, an aggregate of 464,513 brokers warrants were issued to Northern Securities and selling group members to purchase 464,513 shares for 31 cents each, as partial remuneration for their services.

• Quark Pharmaceuticals Inc., of Fremont, Calif., postponed its initial public offering, an underwriter reported. The company filed to go public in late March and, earlier, this month, set the proposed pricing of 5 million shares at $12 to $14 per share, which would have grossed $65 million at the midpoint. JP Morgan and Banc of America were named as bookrunners. (See BioWorld Today, April 2, 2007.)

• Targeted Genetics Corp., of Seattle, completed its private equity offering of 6.7 million shares of common stock at $2.91 each, together with warrants to buy up to an aggregate of 6.7 million shares priced at $3.25 each, for gross proceeds of $19.5 million. Net funds are expected to total about $17.8 million, which will boost the company's financial position for advancing clinical programs and pursuing business development opportunities. The lead investor was Special Situations Fund, with additional investors Fort Mason Partners LP and Heights Capital Management Inc. Rodman & Renshaw LLC acted as the lead placement agent. (See BioWorld Today, July 25, 2007.)