Serenex Inc. said today that it has done two noteworthy things: raised $30 million in Series C funding and in-licensed a product ready for Phase II trials.

Weighing those two things - $30 million in venture capitalist interest in one hand and a lead product in the other - leaves one pondering if the Phase II product facilitated the investor attention, or if the cash was brought in to seal the licensing deal.

"Chronologically, the in-licensing came first," said Richard Kent, CEO and president of Serenex. "We in-licensed SNX-1012 at the end of July, and the Series C closed last week."

That new product gave VCs something to focus on.

"It's a Phase II clinical asset that we are very high on," Kent told BioWorld Today. "It definitely helped in our financing."

The Series C is a nice validation of the work Serenex has done to morph into a drug discovery and development entity. When it raised its first funding in 2001 - a $2 million Series A - interest in the company was based on its Functional Proteome Fractionation and Proteome Mining technologies.

That platform now is doing work for Eli Lilly and Co., of Indianapolis; GlaxoSmithKline plc, of London; and Johnson & Johnson, of New Brunswick, N.J., to name a few. It also has given Serenex a series of heat-shock protein 90 inhibitors that is expected to push a product into Phase I work in early 2007.

While Serenex of Durham, N.C. went on to bring in a $15 million Series B round in August 2002 and pull in $8 million in a B-1 round in May 2004, its days of pitching a tools or preclinical story to venture capitalists are over.

SNX-1012 was in-licensed from Mucosal Therapeutics LLC, a holding company located in Wellesley, Mass., in a "very standard" biotech deal, Kent said, although specifics are not being disclosed. The product is a tetracycline analogue, and while its "precise pathway has not been elucidated," the company will conduct studies to map it. It's designed to treat oral mucositis induced by chemotherapy or radiation, and could corner a market segment.

"There is nothing approved for the [solid-tumor population] we are targeting in our clinical trials," Kent said, adding that a "couple of compounds" are being studied for mucositis by others.

Minneapolis-based MGI Pharma Inc. is furthest along, having completed Phase III work in breast cancer patients with Saforis, an oral suspension of glutamine. The company expects to file a new drug application this year.

RxKinetix Inc., of Louisville, Colo., has RK-0202, an oral rinse formulation of N-acetyl-L-cysteine, in Phase II trials for oral mucositis in patients receiving radiotherapy to the head and neck. And Curagen Corp., of Branford, Conn., has Velafermin, a recombinant human fibroblast growth factor-20 protein, in Phase II trials in patients undergoing bone marrow transplantation.

But perhaps the best known product, and for the wrong reasons, is iseganan hydrochloride oral solution, developed by Intrabiotics Pharmaceuticals Inc., of Palo Alto, Calif. The company moved it forward as a treatment for oral mucositis, but in 2002 it failed a Phase III study in patients undergoing high-dose chemotherapy. Intrabiotics then tried to develop it for ventilator-associated pneumonia, but a pivotal trial was snuffed due to safety concerns.

By June of this year, the company had discontinued operations and terminated all employees. (See BioWorld Today, Oct. 1, 2002, and June 24, 2004.)

That's not the model Serenex cares to follow, but Kent isn't concerned.

"[Iseganan] was a different molecule, and the clinical trials were defined differently," he said. "We're pretty comfortable with SNX-1012 and with the preclinical and clinical data we have."

Kent also said the company is "currently pursuing" another Phase II product in the oncology supportive care area. If a deal is struck, look for Serenex to expand the Series C round to bring in new funds.

Decisions on those two moves "go hand in hand, a little bit," he said, adding that while "we haven't made the final decision to in-license it," the company has a "goal to license a second Phase II product at some point in time."

With a growing portfolio, Serenex again has to decide what kind of biotech company it wants to be. Will it take on sales and marketing?

"The heat-shock protein program we are exploring partnering," Kent said. "Our preference is to enter a partnership where a large company would invest in us" and help with development and sales. But Serenex plans to take its supportive care franchise to the finish line and commercialize products itself.

Kent came on board at Serenex as new CEO and president in late 2002, and Ian Howes, current chief financial officer and senior vice president of corporate development, was added this year.

Before today's announcement, the last public word from Serenex was heard in May, when it said it was moving its series of HSP90 inhibitors into preclinical development. Back then, it was a company digging up animal research on its first molecules. Today, things are different, and the new management has scored a Series C round, in-licensed a Phase II product, and identified a second compound it is pursuing, all within the past 12 months.

"I think the company has changed very significantly," Kent said. "We started out as a tools company - before the current management team - and have evolved into a technology discovery company."

Ritchie Capital, of Chicago, led the round, which included Intersouth Partners, of Durham, N.C.; Lilly Ventures, the VC arm of Eli Lilly and Co.; Mediphase Venture Partners, of Newton, Mass., Takeda Research Investment, an arm of Takeda Pharmaceutical Co.; and Seaflower Ventures, of Waltham, Mass.