Valera Pharmaceuticals Inc. collected $11.5 million through a sale of Series C preferred shares in a round of financing that valued the company's worth at more than ever before.

The private equity financing included both new and existing investors.

"I think the central attraction [to the company] is that we have an NDA filed for a novel form of drug delivery," Matthew Rue, Valera's vice president of marketing and commercial development, told BioWorld Today. "So far, the FDA feedback has been very positive, and I think that encourages investors that approval is a good bet."

The company, which is developing products for the urology and endocrinology markets, plans to direct its new funds toward the launch of a prostate cancer product that is under FDA review, and to develop its earlier-stage pipeline. Rue said the funding would carry into the end of next year.

Valera, which has raised total funds of $30.5 million to date, expects to receive approval this fall for the still-unnamed product. An implant that contains histrelin within a formulation of Hydron, the company's drug delivery technology, it is designed to provide a year of continuous hormonal therapy for the advanced form of the disease.

The Cranbury, N.J.-based company submitted its new drug application in December.

"It was a single-arm, open-label study of 138 patients," Rue said of the trial on which the product's filing is based. "You need to show - and we did - that the patients are chemically castrated by week four, and then for 12 consecutive months they remain chemically castrated. They were extremely good results, both at week four and every consecutive month."

Its release is planned soon after approval through an internal sales force, which Rue said would involve less than 50 people. They have yet to be hired, but such near-term prospects have Valera eyeing a cash-positive position next year.

Outside the U.S., the prostate cancer product is partnered with Montreal-based Paladin Labs Inc., which Rue said is in the process of filing a regulatory application with Canadian authorities. He added that Valera is in advanced discussions with a European firm that would carry on the same regulatory activities in that territory.

The Hydron technology is based on blends of hydrogel polymers; the company's implants that feature the technology are delivered subcutaneously.

The technology is employed in two clinical-stage products still in Valera's pipeline. Phase III studies are expected to begin in the next few weeks for a 12-month histrelin implant called VP 002 for central precocious puberty, a disease in which puberty begins too soon in young boys and girls. The condition also causes short stature as bone plates fuse too early because of the early hormone-stimulated growth. VP 002 releases more histrelin than the prostate cancer product.

The company recently began Phase II trials of a six-month octreotide implant called VP 003 for acromegaly, an abnormal growth disorder of the organs, face, hands and feet. The product is designed to suppress the growth hormone that causes the disorder.

The company, which was formerly known as Hydro Med Sciences, owns all rights to both products. It expects to sell them in the U.S., but seek marketing partners to distribute them abroad.

"One of the things that we have learned in specialty pharma is to stay focused," Rue said. "Stay in areas where you can tightly control your costs, and these drugs and others we're looking at are for endocrine diseases or urology diseases. These are nice, small specialties, and a reasonably sized sales force can call on them. So you get a maximum synergy for your sales force."

Valera's Series C round was led by Psilos Group Managers LLC, a New York-based venture capital firm and a new investor, and Sanders Morris Harris, a Houston-based investment banking and investment management firm that led Valera's Series A and B rounds. Other returning investors included Wheatley Partners, of New York, and NJTC Venture Fund, of Mount Laurel, N.J.

In conjunction with its investment, Psilos' Jeffrey Krauss joined Valera's board.