As Reported By VentureWire By Jonathan Matsey - Profectus Raises $3M Series A To Aid Viral Treatments

Three million dollars may seem like a small sum to fight AIDS. But not many start-ups come armed with the pedigree of Profectus BioSciences Inc., whose technology was co-developed by Robert Gallo, one of the men who discovered the virus more than 20 years ago.

Cross Atlantic Capital Partners led the Series A financing, joined by angel investors, said Joe Berardino, chairman and chief executive of Profectus.

Berardino was former CEO of Andersen Worldwide SC.

Profectus, based in Baltimore, began operating in early 2005 with technology licensed from the Institute of Human Virology, a 10-year-old research center set up by Gallo and two other retrovirus researchers, William A. Blattner and Robert R. Redfield.

The trio currently work as director and associate directors, respectively, of the center. Berardino said that they do not sit on Profectus' board, but do work on the company's scientific advisory board. The Institute of Human Virology does have a small equity stake in Profectus as part of the licensing agreement, he said.

Reflecting on its origin, Berardino said that Profectus will initially focus on potential treatments for HIV, although the company will eventually expand into other viral diseases. "We're not just a spin-out of the institute," he said. "We'll pull research from other groups, too."

Berardino said that Profectus is currently working on an AIDS vaccine and has partnered with Wyeth. "We signed an agreement with Wyeth to explore informally working together to do pre-clinical research," he said. Depending on the results of that research, he said that Wyeth has the option whether or not to continue development of the vaccine.

Profectus is also working with cell cycle agent technology as a way to improve current AIDS drug therapies. "We feel we have exciting ways to make current AIDS therapies better," Berardino said. "Existing AIDS therapies are very toxic and we believe we have found a way to make the system accept these drugs more readily."

The new financing will be used to start clinical trials later this year on potential treatments developed from this technology, Berardino said.

Even though his most well known job to date involved heading up a major U.S. accounting firm, not a life sciences company, Berardino said that he has been able to tap his expertise. "When you think about it, if you want to design a great biotech company, you need three things: great science - I can't help with that, but I can with the other two - you manage a creative process where you need to make those tough decisions and you need money."

Berardino, who resigned from Arthur Andersen in March 2002 as the company was catching flack following the bankruptcy of its client, Enron Corp., said that he met Gallo a year later. By 2004, he had joined the fledgling Profectus' board and was appointed chairman in early 2005. In October 2005, he took the added responsibility of CEO.

Profectus was originally known as Maryland BioTherapeutics before it launched operations in 2005. Berardino said that the company raised more than $2 million in angel financing prior to the current round and has seen some revenue from licensing agreements.

Profectus currently has fewer than 10 employees, Berardino said.