Port Hueneme-based Stellar Biotechnologies has closed a $12 million round of financing and acquired a license for what could one day be its first drug.

Stellar gained notoriety in the research world by snatching up a facility inside the Port of Hueneme gates during a round of base closings in the late 1990s. It used that facility to sustainably cultivate giant keyhole limpets. The mollusks produce what is known as keyhole limpet hemocyanin, or KLH, a carrier protein for vaccines that previously had to be harvested from the wild.

Frank Oakes, Stellar’s CEO, said the company has been focused on moving up the value chain. In the past, it provided raw KLH material that other companies would then purify and sell to researchers for integration into therapies. Stellar has developed the ability purify its proteins in house. And in July, it acquired a license to patents covering a potential treatment for infections of Clostridium difficile, or C. diff, a common infection in hospitals.

Oakes said the company, which is traded on small exchanges in the U.S. and Canada and still has negligible revenue, aimed to strengthen its balance sheet to take advantage of those developments. The money was raised as a private placement.

It included a a brokered portion of $5 million sold to institutional and accredited investors. The remaining non-brokered portion included a $5 million investment from Amaran Biotechnology, a privately-held Taiwan-based biotech company and biopharmaceuticals contract manufacturer.

Amaran’s chairwoman, Tessie Che, founded a company that successfully commercialized a previous treatment for C. diff infections and will join Stellar’s board.

“They liked the idea and wanted to get more active in Stellar,” Oakes said of Amaran’s investment. “It brings foreign money invested into Ventrua County biotech. We think that’s a strong statement about the biotech community in Ventura County.”

Stellar’s main product, KLH, has frustrated researchers hoping to make it into drugs because of supply issues. KLH has the ability to activate the body’s immune response, and then researchers can design the business end of a drug to target specific problems, whether it’s particular bacteria or a type of cancer cell.

But most researchers are more focused on the targeting part of the drug and don’t have their own facilities for purifying KLH so that it is injectable into the human body. Oakes said developing that capability at Stellar makes the protein more appealing to researchers by removing an extra step in the supply process.

“We will be the supplier of the active ingredient that induces the immune response. Our partners will create the targets. The combination of those two things, that’s the drug,” Oakes said.
In July, Stellar said it had acquired an exclusive license from the University of Guelph in Ontario, Canada, to develop a treatment for C. diff. While working under an option agreement related to the patents last year, Stellar and Guelph scientists found in preclinical studies that the therapy showed promise in protecting C. diff infections, results that were presented at an international research conference on the bacteria in October.

“It’s because we have such an incredible pool of talent and expertise here in pharmaceutical manufacturing. We recognized we could do more with these people than just produce the protein,” Oakes said. “We have used our stock as a currency to acquire, at low cash cost to Stellar, a technology that we think is a game changer. We’re going to take it through the product development steps and do the proof of concept studies that would be required to make it attractive to a large pharmaceutical company.”

Stellar maintains its original faculties at Port of Hueneme but has also expanded to a building just outside the port gates.

Oakes said the company is actively hiring for positions in manufacturing and regulatory compliance.