Intracel Holdings Corp., newly formed with the assets from bankrupt Intracel Corp., said it completed a first closing of its Series B convertible preferred stock offering, bringing in $16 million.

The company will use the funds mainly to push its cancer vaccine, OncoVAX, closer to FDA approval.

Raising the money hinged on "having [Intracel president and CEO] John Kenward on board - he has a good reputation in the industry," Chief Operating Officer Peter Nardin said. "Secondly, a product line that is somewhat mature and close to fruition, or approval. Those are key - we are very close to revenue."

MPM Capital, of Boston, led the round, and a second closing worth as much as $4 million is expected in the next few weeks. Nardin said MPM "spent a lot of time doing due diligence."

"The fact that they were more than willing to come up with a substantial amount of money gives us great comfort," he told BioWorld Today, adding that MPM is well connected to potential partners for Frederick, Md.-based Intracel, making the relationship "a nice strategic alliance as well as a financial investment."

Intracel Corp. went bankrupt in September 2001. The company was able to operate under bankruptcy until MPM "made the investment to allow a newly formed Intracel Holdings Corp. to come in and buy the assets of Intracel," Nardin said. In the lean years, Intracel was forced to cut back research on its fully human monoclonal antibodies. The funding will allow for a ramping up of that research, as well as completing the work needed to file the OncoVAX biologics license application in the U.S.

OncoVax, an autologous vaccine designed to provoke a specific immune response against cancer cells, is approved for administration in the Netherlands, Switzerland and Israel. Intracel is pursuing formal reimbursement for OncoVAX in the Netherlands and Germany. In the U.S., work is under way for resolving the FDA's concerns with the vaccine.

The FDA, Nardin said, was asking that a sterile vaccine be manufactured, although that does not imply previous vaccines were not sterile. That meant changing manufacturing, something that's time consuming and expensive.

"We had to change in The States the manufacturing process at the behest of the FDA," Nardin said. "It took a lot of money and a lot of time to come up with a sterile vaccine. We implemented that plan in Europe, too, although we were not required to do so."

The company is conducting bioequivalency studies in the U.S. now with the new sterile vaccine and previous vaccines. The outcome, Nardin said, has been a "100 percent positive response so far."

Intracel is looking to stretch OncoVAX's usage, as well. It is investigating the use of OncoVAX in other cancers, including Duke's Stage C colon cancer, renal cancer and melanoma. The company's pipeline includes its Humune libraries of fully monoclonal antibodies, including HumaSPECT, an agent approved in the European union for diagnosing and imaging cancer throughout the body.

Nardin said the company has completed Phase I studies with antibodies in staphylococcus, enterococcus and antifungal areas. Intracel most likely will need a partner for Phase II studies, although Nardin said the company might handle the antifungal indications on its own.

Looking ahead, Nardin said Intracel "would like to get full distribution and reimbursement in Europe" and "be ready to submit to the FDA at the end of next year for OncoVAX."