With its three lead products expected to be in clinical trials next year, Surface Logix Inc. is bringing in an expected $42 million in a private investor round.

The company closed on the first $32 million of its Series D round and plans to add the additional $10 million in a second tranche, based upon the completion of certain milestones, including the completion of some upcoming clinical studies. The second tranche likely will close around the end of 2006, estimated Jim Mahoney, president and CEO of the Boston-based company.

To date, Surface Logix has raised about $82 million through three venture rounds and one angel round.

Funds are expected to fuel the company's operations for about two years and take its three lead programs through Phase IIa trials, Mahoney told BioWorld Today.

The company's lead product, SLx-2101, which recently completed Phase I testing, is a PDE5 inhibitor, of the same class found in marketed erectile dysfunction drugs such as New York-based Pfizer Inc.'s Viagra and Cialis, from Bothell, Wash.-based ICOS Corp. and Indianapolis-based Eli Lilly and Co. Surface Logix's candidate, however, is designed to have an increased duration of action, even longer than Cialis' 36 hours.

"We think we're somewhere greater than 48 hours," Mahoney said. "The trials we're doing in patients will show exactly how long the activity is."

The product is just starting Phase IIa development, and that trial could be completed early next year. To start, Surface Logix will evaluate SLx-2101 in endothelial dysfunction and erectile dysfunction, though future studies are planned in pulmonary arterial hypertension and congestive heart failure.

A second product, SLx-4090, is expected to enter the clinic early next year in dyslipidemia. SLx-4090 is a microsomal triglyceride transfer protein (MTP) inhibitor that Surface Logix has designed to act selectively on the enterocytes. So the drug "inhibits MTP in the lining of the intestines, but not MTP in the liver or anywhere else," Mahoney said, which eliminates the chance of liver toxicity.

Following SLx-4090 in development is SLx-2119, a Rho A kinase inhibitor that has shown promising preclinical data, including some anti-angiogenic effects, and could be a candidate in cancer, atherosclerosis and fibrosis. The company plans to file an IND during the first quarter and begin Phase I testing during the second quarter.

All of Surface Logix's small-molecule drugs are created using its Pharmacomer technology, a chemistry-based platform that analyzes the interactions of different molecules to improve pharmacokinetic and pharmacodynamic profiles.

In short, "it allows us to fix drugs," Mahoney said. "Every drug has some problem or shortcoming, whether it's bioavailability, duration of action, tissue distribution, solubility, or protein binding.

"We can analyze compounds, get a feel for what's causing the problem and design a new chemistry to address the issue," he added. "Then we can put the drug back together to create [new chemical entities.]"

The Pharmacomer technology allows Surface Logix to analyze a range of molecules across indications, and provides for advancement from research to clinic. Mahoney said SLx-2101 was envisioned in June 2003. The company was able to finish the first human study within 22 months. SLx-4090 will reach the IND phase within a little more than 18 months since conception, and SLx-2119 is expected to reach clinical stage in about 22 months.

The platform technology's rapid return likely led to the success of the Series D financing, Mahoney added.

"We have great VCs," he said, "and I think they really wanted us to focus on getting more things done, since we've moved so quickly so far."

Surface Logix has not partnered any of its programs, though Mahoney said that will be "something we look at as we get into the Phase IIa world."

New investor Unilever Technology Ventures, of Santa Barbara, Calif., participated in the round, along with existing investors Venrock Associates, CW Group and TIAA-CREF, all of New York. Also involved are Chicago-based Arch Venture Partners; Zurich, Switzerland-based HBM Partners; Healthcare Focus Fund; and Hillsboro, Ore.-based Intel Capital.

In other financing news:

• Bioniche Life Sciences Inc., of Belleville, Ontario, clarified terms of its $10 million debt financing, including a $5 million U.S.-secured revolving facility and a $5 million U.S. convertible term facility. In addition, Bioniche negotiated a $7.5 million 120-day bridge facility that can be drawn to the extent needed pending completion of the company's previously announced sale of its Bioniche Pharma Group. That transaction is set to close in November. The company shares, listed on the Toronto Stock Exchange under "BNC," closed at C90 cents (US76 cents) Friday, up 9 cents.

• EntreMed Inc., of Rockville, Md., filed a shelf registration to sell, from time to time, up to $50 million of its common stock and warrants to purchase common stock. Terms and prices will be determined at the time of the offering. The company said there are no immediate plans to raise funds, though future proceeds will support the expansion of its clinical programs, including Phase II studies of its lead oncology candidate, Panzem NCD (2ME2), and Phase I trials for a second oncology product, ENMD-1198. EntreMed also plans to begin studies for 2ME2 in rheumatoid arthritis this quarter in anticipation of filing an investigational new drug application in 2006.

• Generex Biotechnology Corp., of Toronto, received an aggregate of $6.4 million over the past two weeks as a result of the exercise by existing investors of previously issued warrants. The company said receipt of the funds has put it in its strongest cash position in nearly two years. The funding is expected to assist with the launch of commercial sales of Oral-lyn, an oral insulin spray product, in Ecuador by the end of the year. Generex plans to begin Phase III/IV trials of the product during the first half of next year, after receiving approvals in Canada and Europe. The company also has an avian flu vaccine product in development by its subsidiary, Antigen Express. Shares of Generex (NASDAQ:GNBT) closed at $1.17 Friday, down 4 cents.

• Inflazyme Pharmaceuticals Ltd., of Vancouver, British Columbia, completed the reorganization announced in September, which raised an initial $3.4 million by restructuring one of its wholly owned subsidiaries, and recently sold all of the company's holdings in the subsidiary for an additional $3.6 million. Inflazyme said it retains all the intellectual property assets, including the LSAIDs, the PDE4 inhibitors, Prodaptin, APT070 and ATH. The proceeds, totaling $7 million, are expected to advance the company's business plan and provide sufficient cash until the end of 2007.

• Myriad Genetics Inc., of Salt Lake City, said it began an underwritten public offering of 7 million shares of common stock pursuant to an existing shelf registration. The company also expects to grant underwriters a 30-day option to purchase up to about 1.1 million shares to cover overallotments. JP Morgan Securities Inc., of New York, is acting as the sole book-running manager, with Bear, Stearns & Co. Inc. and UBS Securities Inc., both of New York, acting as co-lead managers. Piper Jaffray & Co., of Minneapolis, along with First Albany Capital Inc. and JMP Securities LLC, of New York, are acting as co-managers. Shares of Myriad (NASDAQ:MYGN) closed at $19.44 Friday, down $1.02.

• Scolr Pharma Inc., of Bellevue, Wash., filed a shelf registration statement to sell up to $40 million in common stock and/or common stock purchase warrants. The terms of any future offering would be established at the time of the offering. Scolr said it intends to use proceeds from any offering to fund its research and development programs, clinical trials, capital expenditures and for other general corporate purposes.

• TransOral Pharmaceuticals Inc., of Corte Madera, Calif., raised $23 million in its Series C round, led by an $8.5 million investment from New Leaf Venture Partners, of Menlo Park, Calif., to support development of products using its drug delivery technology to enhance the bioavailability of existing pharmaceuticals and speed their onset of action. Menlo Park, Calif.-based firms InterWest Partners, Montreux Equity Partners, and Peninsula Equity Partners also participated in the round, along with San Diego-based Hamilton BioVentures and Palo Alto, Calif.-based Vivo Ventures. Kathy LaPorte, managing director of New Leaf Venture Partners, joined the company's board.