BioWorld International Correspondent

PARIS - Meristem Therapeutics completed a fourth funding round in which it raised €21.15 million (US$20.7 million) from existing and new investors.

Of that total, €13 million was put up by eight newcomers, all of them Paris-based venture capital funds specialized in life sciences: AGF Private Equity, Antin Innovation, CPR Private Equity, Innoven Partenaires, La Compagnie Financière de Rothschild, Odyssée Venture, Pechel Industries and SPEF (part of Financière Natexis Banques Populaires).

Seven existing investors, led by Banexi Ventures Partners, a subsidiary of Paris-based BNP Paribas, put up more than €8 million of the total. The other six contributors were BNP Private Equity, of Paris; Tethys, of Paris; 3i, of London; Unigrains, of Paris; Sofimac, of Clermont-Ferrand; and Sofipar, of Paris.

Meristem Therapeutics, of Clermont-Ferrand, was created in 1998 and says it is the world leader in the extraction of therapeutic proteins from plants. It was originally a wholly owned subsidiary of the French seed company Limagrain, also of Clermont-Ferrand, which decided to spin off its "molecular pharming" and plant engineering activities into a separate business.

The latest financing brings to €46 million the total funding Meristem has raised since then. The three previous rounds were completed in January 1999 (€9 million), June 2000 (€10 million) and September 2000 (€6 million). Limagrain now has ceased to be the largest shareholder in Meristem, since its stake has fallen to 20 percent, while BNP Paribas and its affiliate now have a total holding of over 25 percent. 3i is the company's third largest investor, with around 10 percent. Between them, those three organizations control more than half of the company's capital.

Meristem embarked on the private financing following the failure of the initial public offering it launched on the Nouveau Marché of the Euronext stock exchange in Paris in June 2000. It hoped to net €54 million from the offering, but was forced to cancel it a few weeks later because of unfavorable market conditions.

At a conference in Paris, President and CEO Bertrand Merot said Meristem expected to attain financial break-even by 2005 or 2006. "Theoretically, we won't need to raise more funds before reaching break-even," he said, adding that "our burn rate will stabilize at €5 million to €7 million a year." But he did not rule out the possibility of another funding round specifically to finance a strategic move, such as the acquisition of a company or the licensing of a protein developed by a third party. He added that the company still is planning to launch an IPO "when the markets are open and there is sufficient confidence and stability in the markets."

Meanwhile, Merot said, the latest injection of funds will be used to establish a sales force in the United States, develop industrial-scale protein extraction and purification facilities, create an IV purification unit to produce directly injectable therapeutics, and develop the company's research and development activities in key upstream areas. Its U.S. sales team will be based in Boston and composed of five or six people, two or three of whom will be transferred from France. It is due to be operational by the fall.

Meristem plans to establish production facilities with the capacity to produce up to 2 tons a year of gastric lipase, its lead product, probably from two units rather than a single large one. Its existing extraction/purification plant in Clermont-Ferrand can produce 20 kilos a year of pharmaceutical-grade recombinant proteins from plants (mainly corn and tobacco).

The options Meristem is studying for industrial-scale production include two "very enticing" offers from the states of Iowa and Virginia, Merot said, but those would entail setting up facilities from scratch. It also was looking at two other sites in Europe where facilities existed and would need only to be adapted to the company's requirements. They would thus be quicker and cheaper to bring into operation, Merot said. The U.S. is one of four countries where Meristem has field trials under way to provide biomass for its existing extraction plant, the others being France, Spain and Chile.

The company's lead product, gastric lipase, is being co-developed with the Belgian company Solvay Pharmaceuticals, of Brussels, for the treatment of cystic fibrosis, and Merot said he hoped to have it on the market as an orphan drug in that indication by 2005. A limited Phase IIa trial in 13 patients has been completed and yielded positive results, and in 2003 a larger Phase IIb trial with more than 100 patients would be initiated.

Meristem has two other products under development. One is human lactoferrin, a protein secreted in mother's milk that protects against infections, which is undergoing a Phase IIa trial in an ophthalmological indication. The other is human serum-albumin, a protein used in skin repair and reparative surgery.