02/08/2007

ProActa, Inc. Raises $35 Million Series B Financing

NEW ZEALAND, Thursday February 8, 2007 – Proacta Inc., an oncology drug discovery and development company, announced today that it has raised a further US$35m in a Series B round of funding. This new funding will be used to take New Zealand-discovered anticancer compound PR-104 through the next phase of clinical development and support the discovery and development of new compounds. Another New Zealand clinical testing site, The University of Auckland, will soon begin treating patients with PR-104. The first human clinical trial for PR-104 was started at Waikato Hospital in early 2006 and their clinicians, along with those in Australia and the US, have continued to play a significant role in the early clinical testing of the drug.

Direct interaction between scientists and clinicians, on the joint development of a drug candidate coming from the Auckland Cancer Society Research Centre (ACSRC), is the overall aim of the ACSRC, and of its staff members and Proacta founding scientists Professors Bill Denny and Bill Wilson.

“Our motivation in founding Proacta was to provide a vehicle that would maximize ACSRC and more broadly New Zealand’s participation in all aspects of the drug discovery and development process, and thus help build infrastructure locally. The new US funding is helping to make that a reality.

“While New Zealand investors maintain a sizeable holding in Proacta we couldn’t do what we are doing without US venture capital, and that’s maximising the local opportunities both scientifically and clinically. It means we can submit an IND (Investigational New Drug) application to the Food and Drug Administration for clinical development of a second compound,” Dr Wilson said.

PR-104 was developed and progressed to clinical trial in New Zealand. It is a unique anticancer drug that is converted to a DNA damaging agent in the hypoxic (oxygen deficient) regions in tumours. The trials are an important step in seeking to exploit abnormality in the blood supply of tumours as a basis for treatment. Relapse of treated cancer is probably often due to the ability of cancer cells in hypoxic regions to survive existing treatments.

Research Clinicians at the University of Auckland have worked closely with the ACSRC and Proacta assisting with the strategic direction of the clinical development program for PR-104. Professor Michael Findlay notes that the hypoxia target is particularly exciting as emerging clinical evidence suggests that a large proportion of the 10 million people who are diagnosed with cancer each year have areas of significant hypoxia in their tumours. He and the new study’s local lead investigator Associate Professor Mark McKeage, are delighted to open the new trial.

“Pending final steps in our internal approval process we anticipate sign-off for the third PR-104 study in the next month or so. This is a wonderful example of how donations from the New Zealand public, invested via the Cancer Society of New Zealand, can convert into new clinical trial options for New Zealanders with cancer.

Dr Michael Jameson, the medical oncology specialist at Waikato Hospital who began the trials in New Zealand, said he was pleased to offer quite a number of patients the opportunity to go through the first PR-104 trial in the last year.

“The drug appears to be better tolerated than many chemotherapy drugs. We opened a second trial here with PR-104 last month using a new schedule, and plan to open a third trial in March combining PR-104 with chemotherapy.

“We are finding out how much of the drug we can safely give, what side-effects there are, how the body handles the drug, and if there is any evidence of its activity against cancers. It is very much a work in progress and we have been encouraged to date but we have a long way to go”, Dr Jameson said.

Proacta ‘s Chief Medical Officer and Senior Vice-President of Clinical Affairs, John Gutheil is based in San Diego and he’s very impressed with the quality of clinical research in New Zealand.

“It would be fair to say that working in New Zealand is new for most US companies and I’ve been delighted with the standard of collaboration and working relationships.

“Drug discovery and development is an expensive and risky business requiring huge demands on time and resources.

“This would not have been possible without wide support from many organisations, including the Auckland Cancer Society and the Health Research Council of New Zealand. We look forward to commercialising a cancer treatment that was discovered in New Zealand,” said Dr Gutheil.

The funding brings two new US life sciences venture capital firms to Proacta. Clarus Ventures, which led the round, and Delphi Ventures join existing investors, Alta Partners (US), GBS Venture Partners (Australia) and New Zealand Venture Investment Fund -backed No 8 Ventures (NZ) and Endeavour iCap (NZ), as well as international pharmaceutical companies Genentech and Roche. Managing Director Dennis Henner, Ph. D of Clarus Ventures and General Partner Deepa R. Pakianathan, Ph.D. of Delphi Ventures will join Proacta’s Board of Directors in conjunction with the funding.

Dr Henner said “Proacta has made significant progress in the initial clinical trials of PR-104. The results to date demonstrate compelling science that can be translated into patient benefit. We look forward to working with this outstanding team to develop drugs that have the potential to improve upon current treatments for many cancer patients.

Proacta has also been supported with grants from TechNZ and the Australia New Zealand Biotechnology Partnership Fund administered by NZTE.

Economic Development Minister Hon Trevor Mallard said today that the fact New Zealand science has attracted such significant funding from such high level US investors is an enormous endorsement of the calibre of our scientists.

“It shows New Zealand can take our biotechnology and medical science ideas and convert them into global success.

"It is also very satisfying to see that the public investment in Proacta, via the New Zealand Venture Investment Fund (NZVIF), is also paying off, with this strong endorsement by the international commercial community.

"The government set up the New Zealand Venture Investment Fund (NZVIF) in 2001 with exactly these sorts of goals in mind,” he said.

Proacta has submitted an abstract on the progress of the clinical trial to date to the American Society of Clinical Oncology meeting in June 2007.

Background

About Proacta Inc.

Proacta is focused on the treatment of tumours by exploiting their abnormally low concentrations of oxygen (hypoxia). Hypoxia is present in the majority of solid tumours and makes treatment with conventional chemotherapy and radiation less likely to succeed.

Proacta’s drugs are delivered as innocuous compounds that are selectively activated in hypoxic regions of tumours. This can result in killing not only the hypoxic cells but also the surrounding tumour cells which have more normal levels of oxygen.

About Clarus Ventures

Clarus Ventures is a life sciences venture capital firm with a team that has a long history of success in creating value. It augments its core expertise of investing in biopharmaceuticals and medical technology with the deep and diverse expertise of the team in research and development, commercialisation, business development and operations management at the global level. Its inaugural fund totals $500 million in commitments. Its first fund is primarily invested in US-based biopharmaceutical and specialty pharma companies with products in development at value inflection points in their lifecycle. Secondary areas of focus are companies specialising in biotechnology platforms or medical devices, European life sciences companies, and private investments in public entities.

About Delphi Ventures

The partners at Delphi Ventures help build healthcare companies. They provide capital, contacts and leadership to help entrepreneurs realize their vision. Healthcare is Delphi’s sole focus. Founded in 1988, it was among the first venture capital firms in the United States to focus on early stage medical device and biotechnology investments. It has committed capital of US$850M and funded over 150 companies and has raised a total capital of more than US$3.5B.