A small Malvern biopharmaceutical company, Ception Therapeutics Inc., has raised $63 million, the largest private-equity investment in the Philadelphia area in three years.

With 26 employees, Ception was founded in 2004 to license a biologic compound whose development had been halted by a large drug company after early- and mid-stage trials established the product's safety.

"It was a program I was aware of that was killed by a company for certain reasons," said president and chief executive officer Stephen A. Tullman, who left GlaxoSmithKline P.L.C. after 14 years to start Ception. "We felt there was an opportunity to move it forward in very specific diseases."

Ception will use the financing in part to test the compound in a late-stage Phase 2-3 patient clinical study starting in July to treat several inflammatory disorders.

"The biological effect is known; therefore, we think it will work in the conditions we are targeting," Tullman said. "We are not disclosing the medical indications at the moment for competitive reasons."

"This is an injectable product, and it's for some severe conditions where there really isn't therapy."

The last biotech company to raise such a large private-equity investment - $63.5 million - was Eximias Pharmaceutical Corp. for a chemotherapy drug for inoperable liver cancer, according to the MoneyTree Survey by PricewaterhouseCoopers and the National Venture Capital Association, based on data from Thomson Financial.

But, in August 2005, after a Phase 3 clinical trial showed the drug, Thymitaq, did not prolong patients' lives any better than an older generic chemotherapy treatment, Eximias had to reinvent itself. Last April, the Berwyn company was acquired, in a cash-and-stock deal worth more than $30 million, by a Canadian company developing cancer products.

It is not enough to have promising technology. The resulting drug must be safe and work in patients. Proving that takes big money - and a little luck.

Many on Ception's management team came from GlaxoSmithKline. "We formed it initially around the ability to license from large pharma a biologic agent," Tullman said.

In December 2005, Ception merged with Fulcrum Pharmaceuticals, of New York, which had licensed a drug-discovery technology from Johns Hopkins University and has research collaborations with Hopkins and the University of Pennsylvania.

Ception employs 14 in its corporate offices in Malvern and has a research center in Rockville, Md. Tullman said he lived in Chester Springs, and others on the management team live and had worked in the Philadelphia area.

Ception is also working on small-molecule anti-TNF research to treat serious inflammatory disorders.

The $63 million financing was led by Essex Woodlands Health Ventures and joined by other current and new investors including Investor Growth Capital, MDS Life Sciences, Technology Fund II managed by MDS Capital Corp., New Science Ventures L.L.C. and Aperture Venture Partners. Fulcrum Pharmaceuticals raised $21 million in earlier financings.

Contact staff writer Linda Loyd

at 215-854-2831 or lloyd@phillynews.com.