is expected to complete second round financing of $9 million to $10 million by month-end.

The company's business development director Ronnie Dunetz, said that half the money is coming from veteran investors, including Koor Corporate Venture Capital, the American fund Alta Partners and the British-based fund Alta Berkeley Venture Partners.

Most of the rest is coming from two new investors, he said: a private investment company that specializes in biotechnology, and a strategic foreign investor. Both are currently carrying out due diligence.

Medgenics may expand the financing round if there is interest by other potential investors, Dunetz said.

He declined to discuss the company's market value for the purposes of the round, but said it was higher than at the previous financing round. In June 2001 the company raised $7.2 million from Koor and the Alta funds.

Medgenics, located in Misgav, is working on technology to deliver genetic and proteomic therapies through the patient's skin. Its patented "Biopump" delivers genes that code beneficial proteins to treat conditions such as anemia and hepatitis.

The money now raised is intended to sustain the company through 2004, including Phase I clinical trials and expanding activity in the United States. Animal studies have commenced. Medgenics hopes to obtain regulatory permission to market its platform by year-end 2006 or early 2007.

The company was established in 2000 by Dr Andrew L. Pearlman, today its chief executive, and Dr Leonard I. Garfinkel, formerly a senior scientist at Biotechnology General (Nasdaq:BTGC). Its chairman is G. Kirk Raab, the former chief executive of Genentech, and former president of Abbott Laboratories.

One of Medgenics' directors is Jean Deleage, an initial investor in Genentech, Chiron and other leading biotech firms. He also co-founded the biotech venture capital firm Alta Partners.