Preparing to step up development of its first product, RAV12, for gastrointestinal cancers, Raven Biotechnologies Inc. brought in $48.3 million in its Series D round.

Proceeds also will be used to move a second candidate generated by its monoclonal antibody discovery platform toward the clinic, and for general corporate purposes. The financing round was led by Seattle-based Vulcan Capital. Michael Kranda, of Vulcan, joined the company's board.

The latest round "should give us an opportunity to finish Phase I with RAV12, start Phase II and, hopefully, do preclinical work on a second candidate that we could move into the clinic in 2007," said Bill Rohn, CEO and vice chairman of South San Francisco-based Raven.

"2005 has been kind of a dicey year for raising money so we're very pleased that we're probably on the upper end of the private rounds raised this year," he added. "It makes us feel good about the product we're putting into the clinic, and about our discovery platform."

Since mid-year, only four U.S. companies have raised bigger private rounds, according to BioWorld Snapshots: Affymax Inc. raised $60 million in July, Cerexa Inc. gathered $50 million in August, Amicus Therapeutics Inc. brought in $55 million in September and Replidyne Inc. got $62.5 million in September, as well.

Raven's platform was developed by its founder and president, Jennie Mather, who worked for years on antibody products while at South San Francisco-based Genentech Inc. As opposed to using genomic tools to find targets and then creating antibodies - a process that can take as long as five years - Raven's approach is based on the use of tissue-specific cell lines and cancer stem cell lines, which can generate antibodies that bind to surface cell proteins. Then researchers screen the targets to determine whether the receptors effectively bind to cancer cells and whether they also are expressed on normal tissues. After that, antibodies are evaluated for their potential in shrinking and killing tumor cells.

"It's a rather straightforward, simple and elegant platform," Rohn said, adding that Raven was able to validate its approach early on after identifying some EGF receptor blockers similar to Erbitux (cetuximab, New York-based ImClone Systems Inc.) and HER2 receptors similar to Genentech Inc.'s Herceptin. But Raven has no intention of developing products to compete with those drugs. Instead, the company's first product to emerge from its platform is an antibody targeting a receptor found on nearly all gastrointestinal cancers.

RAV12 zeroes in on a glycoprotein found on 90 percent of colon cancers, 95 percent of stomach cancers and 100 percent of pancreatic cancers. And it also is expressed in fairly high levels, making it "a particularly good target," Rohn told BioWorld Today. "We developed and drove this antibody to an [investigational new drug] filing in a little over two years."

Raven is in Phase I testing with RAV12, focusing on establishing the product's safety profile and finding the maximum tolerated dose. Since the patients undergoing treatment typically are in the most advanced stages of the disease, Raven has limited ability to observe clinical activity at this point, though Rohn said a couple of patients have exhibited stable disease.

When the Phase I trial is complete and a maximum dose is identified, the company can enter Phase II to evaluate the product's efficacy against GI cancers, starting with colon and pancreatic cancer patients, and possibly adding trials in additional indications.

Though the goal at Raven is to create a fully integrated antibody company, at this stage it likely will seek partnership opportunities. But RAV12 won't be considered for collaboration until it is through Phase II.

"The key is not partnering too soon," he said, "or we won't get full value for it. This round of financing gives us the opportunity to add value," while maintaining worldwide rights.

As a 60-person company, Raven has entered a few small deals in the past, usually providing a handful of antibodies for other companies to investigate. But in the future, Rohn said, the company will look for "more substantial partnerships" involving Raven's discovery engine in "multiyear, multiproduct deals that would include some of our later-stage IND candidates."

To date, the privately held company has raised $114.3 million. Its last financing round was completed in January 2003, when the company brought in $40 million.

Joining Vulcan Capital in the Series D round were: Biogen Idec New Ventures, of Cambridge, Mass.; CIDC Consultants Inc.; Mitsubishi UFJ Capital Co. Ltd., of Tokyo; Bear Stearns Health Innoventures, of New York; Pequot Ventures, of Menlo Park, Calif.; Singapore's BioMedical Sciences Investment Fund Pte. Ltd.; Integra Ventures, of Arlington Heights, Ill.; U.S. Venture Partners, of Menlo Park, Calif.; CMEA Ventures, of San Francisco; Hambrecht & Quist Capital Management LLC, of Boston; Milepost Ventures, of San Francisco; and Cogene Ventures, of Houston.

In other financing news:

• Aerie Pharmaceuticals Inc., of Research Triangle Park, N.C., closed a $21 million Series A round to advance development of its lead product, AR-101, a second-generation prostaglandin analogue expected to enter Phase I and Phase II trials next year in glaucoma. The company also plans to file an investigational new drug application for another compound. Aerie, which was founded on intellectual property licensed from Duke University Medical Center, focuses on a pipeline of ophthalmology products. The Series A financing was led by Alta Partners, of San Francisco, and Texas Pacific Group (TPG) Ventures, of Fort Worth, Texas. Geoff Duyk, managing director at TPG Ventures, and David Mack, a director at Alta, will join Aerie's board.

• Discovery Laboratories Inc., of Warrington, Pa., filed a universal shelf registration statement with the SEC relating to the possible issuance of up to $100 million in securities. The filing should allow Discovery to, from time to time, issue securities, including common stock, preferred stock and debt securities. Discovery focuses on a Surfactant Replacement Therapy platform, led by Surfaxin, an approvable product in the treatment of respiratory distress syndrome in premature infants. Shares of Discovery (NASDAQ:DSCO) gained 2 cents Wednesday, closing at $6.02.

• Endo Pharmaceuticals Holdings Inc., of Chadds Ford, Pa., completed its secondary offering of about 33.4 million shares of common stock at a price of $26.04 per share. All of the shares are outstanding, and most were sold by Endo's largest shareholder, Endo Pharma LLC, which now holds about 17 percent of Endo's outstanding common stock. Endo, which has about 133 million shares outstanding, did not receive any proceeds from the offering.

• GTx Inc., of Memphis, Tenn., priced its public offering of 5.5 million shares of common stock at $7.80 per share, to raise $42.9 million. Underwriters were granted 30 days to purchase up to an additional 825,000 shares to cover overallotments. The company said it expects to use proceeds to fund clinical development and other research and development activities, as well as for working capital and general corporate purposes. GTx anticipates the funding, along with its current cash resources and product revenue expected from the sale of Fareston, to sustain the company's operations through the first half of 2007. New York firms Lazard Capital Markets LLC and SG Cowen & Co. LLC are acting as joint book-running managers for the offering. GTx's stock (NASDAQ:GTXI) closed at $8.40 Wednesday, up 60 cents.

• Light Sciences Oncology Inc., of Seattle, completed a $35 million Series A preferred stock offering. The funds will be used to undertake a Phase III trial of its Light Infusion Technology (Litx) to treat hepatocellular carcinoma under a special protocol assessment from the FDA. In connection with the financing, Light Sciences Oncology has been spun out of Light Sciences Corp., of Seattle, which developed Litx initially for ophthalmology and cardiovascular disease.

• Ortec International Inc., of New York, entered definitive stock purchase agreements to privately place its common stock and warrants with a group of investors in the aggregate amount of about $3.3 million, at a price of 25 cents per share. The purchasers also will be issued stock purchase warrants with an exercise price of 50 cents in an amount equal to 50 percent of the number of common shares purchased. In connection with the closing of the placement, the holders of $3.5 million of outstanding convertible promissory notes due Dec. 31, 2005, converted them into equity. Proceeds from the financings will allow the company to complete enrollment in its confirmatory trial of Orcel in venous ulcers.

• Threshold Pharmaceuticals Inc., of Redwood City, Calif., is offering 6.25 million shares of its common stock at a price of $10.46 per share to raise about $65.4 million. Proceeds from the offering are expected to be used for clinical development of TH-070 in symptomatic benign prostatic hyperplasia, glucosfamide for cancer, and 2DG, for the treatment of solid tumors. The company also granted underwriters an option to purchase up to an additional 937,500 shares to cover overallotments. Morgan Stanley, of New York, is acting as sole book-running manager, and CIBC World Markets and Lazard Capital Markets, both of New York, are acting as co-managers. Shares of Threshold (NASDAQ:THLD) lost 45 cents Wednesday to close at $10.01.

• Vical Inc., of San Diego, agreed to sell about 4.7 million shares of its common stock at $4.80 per share in a registered direct offering to raise $22.6 million. Proceeds are expected to fund further development of its cytomegalovirus vaccine, as well as the interleukin-2/electroporation and avian influenza vaccine programs. Money also will be used for general corporate purposes. Vical does not plan to use any of the proceeds to continue developing Allovectin-7, its metastatic melanoma drug. The company intends to seek a partner for that program before moving into a Phase III program, and had said in February that it might do so. New York-based Piper Jaffray & Co. acted as lead placement agent for the offering, with Needham & Co. LLC and Rodman & Renshaw LLC, both of New York, acting as co-placement agents. The offer is expected to close Oct. 17. Shares of Vical (NASDAQ:VICL) fell 20 percent Wednesday, losing $1.21 to close at $4.84. (See BioWorld Today, Feb. 11, 2005.)