In its first venture financing round, NanoBio Corp. secured $30 million in private equity to support ongoing development of its nanoemulsion-based therapies for infectious diseases.

The company has received the first of three $10 million tranches from Washington-based private equity fund management company Perseus LLC, and expects to receive the remaining funds for completing certain clinical milestones. If all goes as anticipated, the company should hit those milestones within the next two or two and a half years, said John Coffey, vice president of business development for NanoBio.

"But the nice thing about Perseus is that they're capable and have the interest in [providing] additional funding, based on results," he said.

Prior to this round, NanoBio had to "do a lot with a little bit of money," Coffey said. The firm brought in about $12 million, relying on angel investors and government grants, such as a $3.2 million grant from the Department of Defense in 2003.

NanoBio was founded in Ann Arbor, Mich., in 2000 by James Baker, director of Biologic Nanotechnology at the University of Michigan, who developed the nanoemulsion technology in his lab. NanoBio holds a worldwide, exclusive license to that technology.

The NanoStat technology involves the use of nanometer-sized oil droplets - each about a thousandth of the diameter of a human hair - that are suspended in water and stabilized by surfactants. The droplets are designed to react specifically with the outer membranes of infectious organisms when administered either topically or mucosally.

As opposed to "traditional antibiotic therapy, which employs chemical inhibitors to stop the reproduction of the organisms," Coffey told BioWorld Today, "nanoemulsion uses a physical process," in which the nanoparticles fuse with the outer membrane of the microbe and release the surfactant, which disrupts the outer membrane and kills the microorganism.

That mechanism of action means that the treatment is non-toxic and it preempts the resistance that often develops with the use of existing antibiotics. In fact, NanoBio has a preclinical-stage compound aimed at treating methicillin-resistant Staphylococcus aureus infection.

Nanoemulsion-based drugs can "provide higher levels of safety without harm to the patient," Coffey said, adding that they are safer than systemic drugs and, based on early clinical results of its lead products, suggest greater efficacy.

The company's lead product, NB-001, is a topical emulsion that has completed Phase II studies in herpes labialis (cold sores), in which it demonstrated promising results in healing by killing the herpes viruses at lesion sites. NanoBio expects to begin Phase III studies next year.

Money from the recent financing is expected to fund that Phase III program, as well as upcoming Phase II trials of the company's second product, NB-002, in development for onychomycosis. A third product, NB-006, is in preclinical studies as a mucosal vaccine for influenza.

In the meantime, other mucosal vaccine work based on the company's technology is ongoing at the University of Michigan, with funding from the Grand Challenges in Global Health Initiative grant supported largely by the Bill & Melinda Gates Foundation in Seattle. That work is testing a hepatitis B vaccine that can be delivered by nasal swab as opposed to injection.

NanoBio anticipates out-licensing at least one of its two lead products, and seeking a co-promotion arrangement for the other. Coffey said the company expects to sign a deal on one of those products "in the near future."

NanoBio continues to work with the University of Michigan and contracts out for much of the research and lab work. The firm has nine employees, "though we expect to be expanding that pretty soon," Coffey said.