Blood substitute development has been one of the most difficult regulatory roads to travel in med-tech, but its obvious difficulties have not dissuaded investors from getting behind Sangart (San Diego), which raised $50 million in a Series F round of financing this week.

The financing included warrants that would add $50 million more in funding to the company.

Sangart in February launched a Phase III trial in Europe of Hemospan, its human hemoglobin-based product whose oxygen delivery is designed to mimic that of red blood cells.

"The field we work in has become fairly cynical now, with a number of prominent failures in the last decade among companies developing blood substitutes," said Robert Winslow, chairman, president/CEO of Sangart. "It's a tough time to develop blood substitutes, especially for small companies like us.

But, he added: "We believe we've solved the significant problems [in the effort], and we're fortunate to have significant investors who share that belief," Winslow told Medical Device Daily's sister publication BioWorld Today. "We believe the data support our conclusions."

The round was led by existing investor Leucadia National (New York), a holding company involved in a number of business areas. Specific details of the deal and other investors were not disclosed. Leucadia is Sangart's largest shareholder, Winslow said. Sangart has raised more than $120 million since its founding in 1998.

Hemospan consists of unmodified hemoglobin derived from human red cells, to which polyethylene glycol polymers are attached and is designed to deliver oxygen effectively to tissues at risk of oxygen deprivation. The company says that Hemospan works because its oxygen delivery mimics that of red blood cells, presenting the right amount of oxygen to the blood vessel wall and preventing blood vessel constriction so blood flow can be maintained through capillary beds.

A Phase II trial in 90 patients in Sweden undergoing hip arthroplasty procedures demonstrated a statistically significant reduction in the number of hypotensive episodes in the Hemospan groups (46% in the 250 mL group, 42% in the 500 mL group) vs. 87% in controls (p<0.025). Data from the trial released in November also showed the incidence of intraoperative vasopressor use was less in the Hemospan groups, but not at a statistically significant level. It did show that mean heart rate was less in both treated groups vs. controls.

Winslow said Sangart has shown in Phase II the product's ability to prevent and treat hemodynamic instability, especially hypotension, or low blood pressure. He said the Phase III program to a large degree is an extension of that work. The goal is to determine if Hemospan can help patients avoid hypotension during elective surgery. Hypotension, Winslow said, is one of the strongest indicators for blood transfusions among patients losing blood.

The parallel Phase III trials are designed to include more than 800 patients in several European countries. One study will test Hemospan in preventing hypotension, the other to treat it. Winslow said treatment already is underway at about 40 sites in five countries, with enrollment expected to take about a year.

Phase II development of Hemospan in the U.S., which began in July 2005, has been bogged down by regulatory requirements and other issues, Winslow said.

He said Sangart intends to file an investigational new drug application to begin testing of Hemospan in the U.S. for sickle cell anemia. And it is planning a Phase II trial in Europe to test the oxygen-transport agent for oxygenation in the skin of patients with peripheral arterial disease.

Sangart also is developing technology to allow more user- friendly storage mechanisms.

Sangart is not leading the pack of companies addressing the market of blood substitution, a field that has dwindled somewhat over the years. The front-runners in the area are Northfield Laboratories (Evanston, Illinois) and Biopure (Cambridge, Massachusetts), but they have both run up against significant barriers to product approval.

Shares of Northfield lost more than half their value in December when it reported that its product, PolyHeme, failed to meet its primary endpoints in a Phase III trauma study. PolyHeme, a human hemoglobin-based oxygen-carrying red blood cell substitute, was being evaluated in severely injured and bleeding patients when a blood transfusion is needed but blood is not immediately available. The company said it still intends to file a biologic license application, based on certain non-inferiority data.

Biopure suffered a setback in December when the FDA's Blood Products Advisory Committee recommended against proceeding with the U.S. Navy's proposed Phase IIb/III trial, a 10,100-patient study of the company's bovine-based oxygen therapeutic, Hemopure, for pre-hospital treatment of hemorrhagic shock resulting from traumatic injury.

Among others facing an uphill climb in the sector are Alliance Pharmaceutical (Evanston, Illinois) which has had clinical and financing setbacks with development of Oxygent, an oxygen "carrier;" and Hemosol (Toronto), which was bankrupted by its attempt to develop Hemolink.

Another company in the field is Synthetic Blood International (Costa Mesa, California), which in December reported positive preliminary Phase IIa data from its Oxycyte product in eight patients with traumatic brain injury. Sanguine (Pasadena, California), is developing the oxygen-carrying synthetic substitute for human red blood cells, PHER-O2. It plans to use the product in conjunction with other transplantation transport materials to provide an oxygenated environment to aid in the longevity of whole organs.

HemoBioTech (Dallas) is sponsoring research at the Texas Tech University Health Science Center, focused on development of the company's HemoTech product as a substitute for human red blood cells.

Winslow said that his company's product is distinguished by a focus not just on the blood product, but also on the transport system. He said the chemistry at Sangart is also advanced compared to some of the older products. A breakthrough, the company said, came from the understanding of the mechanisms of vasoconstriction caused by cell-free hemoglobin, and the development of simplified production methods.

Winslow said his company is open to a collaboration for Hemospan and has had discussions with potential partners. But they have become "as cynical as everyone else. We need more data than were needed a decade ago. And we're okay with that.