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DIATECH ANNOUNCES $11.5 MILLION PRIVATE PLACEMENT; OVERSUBSCRIBED ROUND TO FUND CLINICAL TRIALS ON FOUR PRODUCTS

 LONDONDERRY, N.H., Dec. 3 /PRNewswire/ -- Diatech, Inc. announced today it raised $11.5 million in private financing. The pharmaceutical company said the funds would be used to advance its four lead products through clinical trials.
 The lead investor is affiliated venture capital firms Chemicals and Materials Enterprise Associates and New Enterprise Associates. Chemical Venture Partners, an affiliate of Chemical Banking Corporation, New York; Union Carbide's pension fund, Benefit Capital; and Atlas Venture also invested. The balance was financed by Burr, Egan, Deleage; Sprout Group; Medical Science Partners L.P. and several others, many of whom participated in the two previous rounds of financing.
 Diatech was founded in 1990 with the technology of Dr. Robert S. Lees, licensed from Harvard Medical School by Medical Science Partners. Diatech's initial funding was provided by Burr, Egan, Deleage and MSP with later support from Sprout Group.
 "We are pleased to raise this amount in the current tight capital market for health care stocks," commented Dr. Richard T. Dean, president and CEO of Diatech. "The fact that this round is oversubscribed underscores the interest in what synthetic peptide technology may bring to nuclear medicine."
 Diatech is developing synthetic peptides, laboratory-designed fragments of proteins that "home in" on disease sites. When tagged with technetium-99m, they provide an effective and inexpensive technology for detecting disease. Additional potential applications include using their targeting ability for delivering drugs directly to affected tissue, creating a highly effective therapeutic with minimal side effects. Peptides have advantages over monoclonal antibody technology currently in development for imaging diseases. Peptides are easier and less expensive to develop and produce, have equal or greater targeting ability and do not raise the same concern about causing a HAMA response.
 Diatech is currently in clinical trials with peptide imaging agents labeled with technetium-99m for thrombus, atherosclerotic plaque, sites of infection, and tumors. The company recently announced its signing of two agreements for future products, including rights to evaluate Betafectin(TM) (Alpha Beta Technology) as a potential imaging agent for infection; and beta-amyloid peptide (Harvard University and the University of Minnesota) as an Alzheimer's disease imaging agent.
 According to Donald L. Murfin, General Partner, Chemicals And Materials Enterprise Associates, and Special Partner, New Enterprise Associates, "We saw that Diatech had defined a unique niche in the medical imaging market, one they could easily dominate. We also feel Diatech's technology fits well with health care reform's demands for cost-effective approaches to improved medical technology."
 Mitchell Blutt, M.D., Executive Partner of Chemical Venture Partners who also practices internal medicine at New York Hospital Cornell Medical Center, commented, "Damion Wicker, M.D., Principal of Chemical Venture Partners and I are impressed with the technology and management team at Diatech. We have traditionally invested in new technologies that are close to or in commercialization, and, in the context, Diatech has products that are far along in the development process."
 -0- 12/3/93
 /CONTACT: Hersh Petrocelly, executive vice president and chief operating officer, 603-437-8970 or Brad Miles of Ted Klein & Co., 212-477-9007, for Diatech/


CO: Diatech, Inc. ST: New Hampshire, New York IN: MTC SU: FNC

LD-WB -- NY004 -- 0112 12/03/93 09:00 EST
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Publication:PR Newswire
Date:Dec 3, 1993
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