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Added Russian investment for BioLabs

Tracey Drury

Buffalo Business First Reporter -Business First

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Cleveland BioLabs Inc.    is launching another subsidiary company funded in part by a $26 million investment from a Russian venture capital fund.

The Buffalo company (NASDAQ: CBLI) announced Monday it will receive an initial investment of $9 million from RusNano, with up to $26 million invested over four years, to develop Panacela Labs Inc. The subsidiary will work to develop a portfolio of new pre-clinical cancer drug candidates.

The deal is expected to close around Sept. 30, following three additional investments that include CBLI’s initial investment of $3 million in the subsidiary.

The subsidiary will receive intellectual property rights from CBLI as well as Roswell Park Cancer Institute    , Cleveland Clinic Foundation and Children’s Cancer Institute Australia. CBLI will have initial ownership in the company of approximately 55 percent.

RusNano is a $10 billion Russian Federation fund that supports high-tech and nanotechnology companies. The organization, owned by the Russian Federation government, was founded in March through the reorganization of the state corporation, Russian Corp. of Nanotechnologies. Its mission is to develop that country’s nanotechnology industry through co-investments.

Panacela will focus on a portfolio of five drug candidates developed under the guidance ofAndrei Gudkov, chief scientific officer at CBLI and senior vice president of basic science at Roswell Park. They include Mobilan, a compound designed to induce an immune response to cancer; Revercom, designed to increase the effectiveness of chemotherapy; Xenomycins, a family of compounds for anti-infective treatments; Antimycons, a series of inhibitors that could be used for targeted treatment of multiple cancer types; and Arkils, being developed as a prostate cancer treatment.

Plans call for Panacela Labs to first seek licensure and approval of the drugs in Russian, followed by the United States and other global markets.

Michael Fonstein, CEO and president at CBLI, said the joint venture is in line with the company’s strategy of creating separate, independently-funded companies to develop its line of drug candidates.

“We believe this type of agreement enables us to move multiple, highly promising leads forward,” he said, “while keeping separate management teams focused on a limited number of goals, which are critical for each entity’s success.”

Russian investments continue to fuel CBLI’s work: Last week, the company announced a $5 million investment from the Russian government in another subsidiary company, Incuron LLC, a joint venture between CBLI and Bioprocess Capital Ventures LLC.

With a focus on developing treatments for cancer and acute radiation syndrome, CBLI is based at the Buffalo Niagara Medical Campus    and has strategic alliances with Roswell Park and the Cleveland Clinic, where it was founded in 2003.