Just weeks after in-licensing a series of cholesterol-related compounds, QuatRx Pharmaceuticals Co. raised $28 million in venture capital financing.

Funds from the oversubscribed Series C round are slated for use in expanding the Ann Arbor, Mich.-based firm's product development programs. QuatRx's lead product remains in a Phase II study for psoriasis, while the company plans to push its recently acquired lipid compound into clinical trials within a year.

"Licensing in the lipid compounds from ILEX was critical, as our whole business model is based on bringing such products in," QuatRx President and CEO Robert Zerbe told BioWorld Today. "And it was also helpful to have additional information from our vitamin D study, which is now fully enrolled."

Privately held QuatRx has raised $36 million since its December 2000 incorporation. Zerbe said the funding would last into the middle of 2005, long enough to get the company to the point of another round of venture financing or put it into a position for a public offering.

Also by that point, he said, QuatRx should have partnered out its lead product, QRX-101, a topical vitamin D analogue being studied in 120 patients with mild to moderate psoriasis. The company expects to complete the U.S.-based efficacy trial before the end of the year.

But its recent acquisition of the orally active lipid disorder compounds from ILEX Oncology Inc., of San Antonio, has QuatRx looking toward a brighter future. Its four founders all worked on the development of Lipitor (atorvastatin, from Pfizer Inc.), and Zerbe called that experience key in moving the compounds forward into a worldwide lipid-regulating drug market QuatRx estimated at more than $20 billion per year. He was the senior vice president of clinical research at Warner-Lambert Co., the blockbuster's developer that was acquired by New York-based Pfizer.

"Right now, we will use the money to advance the lipid compounds, develop them and eventually look to out-license them," Zerbe said, noting that the expense of a full clinical program for the drugs is beyond the reach of the latest financing. "But we've learned to be constantly opportunistic about our business, and if something different presents itself we will look into it."

The lead compound, QRX-401, has demonstrated a unique dual-action mechanism - an ability to lower both LDL cholesterol and lipoprotein (a) in primate models, the company said. The twin mechanisms affect two independent cardiovascular disease risk factors, with the occurrence of elevated lipoprotein (a) a possible explanation of heart disease in patients without high cholesterol.

Zerbe said toxicology studies are under way in advance of clinical work, adding that the product has exhibited such a low toxicity profile that the company is in the process of producing larger quantities to sufficiently establish it.

"We need more material to get adequate toxicology studies done to allow us to complete our Phase I program," he said. "Assuming this preclinical data bears out, these are going to be great drugs."

Though still earlier stage in terms of preclinical development, products from the second series are designed to elevate low levels of HDL. The company expects to select a lead compound from the program within a year.

In return for rights to the lipid-focused platforms, QuatRx paid an undisclosed up-front sum to ILEX, which also would receive milestone payments as the programs advance. (See BioWorld Today, May 22, 2003.)

And before the latest funding is used, the company will look down that road again.

"We're still looking for yet another compound in the endocrine metabolic area," Zerbe said.

New investor MPM Capital led the financing and added two representatives to QuatRx's board - Nicholas Simon III, a general partner at the Boston firm, and William Greene, a principal at MPM. Additional investments were made by InterWest Partners, of Menlo Park, Calif., and founding investors Frazier Healthcare Ventures, of Seattle, and TL Ventures, of Wayne, Pa.