Contributing Writer

Continuing the history of lucrative deals based on Toll-like receptor (TLR) platforms, VaxInnate Corp. raised $40 million in a Series C financing to move its TLR-based flu vaccines into the clinic.

Just last month, Dynavax Technologies Corp. signed a deal worth up to $136 million with AstraZeneca plc for the development of TLR9 agonists to treat asthma and chronic obstructive pulmonary disease (COPD). And last year, TLRs were popular, as Coley Pharmaceutical Group Inc. completed a $96 million IPO just a few months after closing a potential $505 million deal with Pfizer Inc. for cancer drug ProMune, also a TLR9 agonist.

"We were interested in getting into the TLR field, which bought us to VaxInnate," said Philippe Chambon, managing director of New Leaf Venture Partners, lead investor. His firm was joined by new investor Canaan Partners and existing investors HealthCare Ventures, Oxford Bioscience Partners LLC, MedImmune Ventures Inc. and CHL Medical Partners.

The financing brings VaxInnate's total raised to date to more than $64 million, plus an additional $5 million to $6 million in nondilutive government grants and contracts.

Alan Shaw, president and CEO of the Cranbury, N.J.-based company, said he expects the money to last through the middle of 2009 "on its own," not including several potential grants in the works. But even without the grants, the cash gives VaxInnate sufficient funding to generate clinical data on its two lead flu vaccine programs, flagellin.HuHA/flagellin.AvHA and flagellin.HuM2e/flagellin.AvM2e.

Both flu programs are based on VaxInnate's core technology, which involves fusing a vaccine antigen to flagellin, a component of the long, hair-like tails that help bacteria swim. As in most vaccines, the antigen component stimulates an adaptive immune response characterized by the production of pathogen-specific antibodies and T cells. But it is the flagellin that gives the technology its edge, stimulating a broad innate immune response through the antagonism of TLR5.

TLRs recognize foreign structures, such as bacterial flagellin, and trigger an immediate immune response. That innate immunity was, evolutionarily speaking, the first line of defense created to protect multicellular organisms; its components are shared by humans, nematode worms, fruit flies and even plants. Despite its ancient history, however, the innate immune system largely was ignored until about 50 years ago, when William Coley observed that his cancer patients who developed postsurgical infections also gained a heightened immune response that prevented the cancer from recurring. Then, in the early 1990s, German scientist Christiane Nüesslein-Volhard discovered the "Toll" gene in fruit flies, naming it after the German slang for "cool."

While several biotechs are pursuing TLRs, Shaw said VaxInnate is the only company "using flagellin in a serious way as a deliberate TLR5 agonist." Additionally, the fusion of flagellin to the antigen creates a more potent vaccine than administering a mixture of the two components unattached, the company said. And since the fused product is made using simple recombinant DNA techniques, it can be manufactured in E. coli, which is faster and cheaper than the egg-based approach used to make flu vaccines.

Flagellin.HuHA links flagellin to viral hemagglutinin (HA), a target antigen for traditional human flu vaccines. Flagellin.AvHA is the avian flu derivative of the program. Similarly, flagellin.HuM2e and flagellin.AvM2e fuse flagellin to the M2 ectodomain of the influenza A virus and avian influenza virus, respectively. However, while HA tends to vary among flu strains, M2e is conserved.

"The idea of pursuing antigens conserved across several flu strains has been limited by an inability to generate a strong immune response," Chambon said. But Shaw explained that several antigens "become very immunogenic when fused to flagellin."

Data presented at a conference earlier this week indicated that the HuHA candidate showed efficacy in mouse studies at low doses, providing complete protection against a dose of influenza that typically kills 90 percent of animals. Data also have shown the M2e program to protect 90 percent of mice against a lethal influenza challenge.

Both programs are preclinical, but Shaw anticipates beginning clinical trials in the first half of 2007.

"We usually don't invest in preclinical stage companies, but VaxInnate is unique," Chambon said, citing the flu indication as an area in which animal models tend to be predictive of success in humans, as well as the potential for the technology beyond flu.

VaxInnate's technology has produced immune responses in animal models of West Nile virus, Japanese encephalitis virus and listeria. Shaw said the company also is working on a potential collaboration with the Department of Defense on a malaria vaccine, and he has "not ignored" the possibilities in cancer, although he's saving that indication for later considering that the landscape is "littered with the carcasses of failed cancer vaccines."

In other financing news:

• Ariad Pharmaceuticals Inc., of Cambridge, Mass., completed its previously announced offering of 3.1 million shares priced at $4.65 each, for proceeds of $14.5 million. Ariad expects net proceeds to total about $14.3 million, which will be used for research and development, clinical trials, manufacturing, intellectual property protection, working capital and general corporate purposes. Credit Suisse Securities (USA) LLC has an option to purchase up to an additional 466,942 million shares, which expires Nov. 18. (See BioWorld Today, Oct. 23, 2006.)

• Cytheris SA, of Paris, raised €24.3 million (US$30.7 million) in a Series B financing to drive Phase II trials of its recombinant IL-7 product candidate and to complete preclinical development of a candidate selected from a NKT/dendritic cell activators platform. The round was led by new investor CDC Entreprises Innovation, of France, and included participation by new investor ABN AMRO Capital Life Sciences in the Netherlands, and existing investors AXA Private Equity, also of France. Also participating were Bioam, of France; Crédit Agricole Private Equity, of France; T2C2/Bio 2000, of Canada; and Caisse de Dép t et Placement du Québec in Canada.

• Protox Therapeutics Inc., of Vancouver, British Columbia, filed to raise C$8 million (US$7.1 million) to C$10 million in a private placement. The company will sell "units" at C50 cents each, comprising one common share and one-half of one share purchase warrant. Each whole warrant will entitle the holder to purchase one common share within 24 months of the date of closing at a price of C65 cents per share. Proceeds will be used to fund clinical development of cancer drugs PRX321 and PRX302, as well as for research and development and general working capital purposes.

• VioQuest Pharmaceuticals Inc., of Basking Ridge, N.J., raised $4 million through the issuance of 7.9 million shares at 50 cents per share in a private placement. Purchasers also received five-year warrants to purchase about 2.8 million shares at an exercise price of $0.73 per share. Proceeds will be used to strengthen the balance sheet and continue clinical development of cancer drugs VQD-001 and VQD-002. The company also continues to consider strategic alternatives relating to its wholly owned subsidiary, Chiral Quest Inc., which provides chiral chemistry products and serves for pharmaceutical and fine chemical industries.