St. Louis, Missouri (August 9, 2002) - Biotech company Divergence has raised more than $3 million in new financing in one of the largest venture fundings of the summer.

The nearly 3-year-old company has raised just under $5 million since its inception, said Chief Executive Derek Rapp, who said the new money came from a combination of individual investors and Prolog Venture Partners, a life science venture fund started in St. Louis last year.

Much of the new Divergence funding came last May, but technically the financing round remained open until July 31, Rapp said.

The money will help continue the research of the company's 13 scientists who are developing technology to interrupt the life cycle of harmful parasites known as nematodes.

"Currently, there's no acceptable environmental solution to (plant) nematodes," said Ilia Nykin, a managing director at Prolog who oversees the venture firm's Divergence investment. The nematodes cause $9 billion in crop damage a year. Animal forms of the parasites, such as hookworms or heartworms, are starting to show signs of resistance to traditional drug treatments, Nykin said.

The investment here comes as other venture firms around the country have been pulling back on their commitments and are being more selective in picking companies for investments in the slumping economy.

Divergence is Prolog's seventh investment, Nykin said, adding that the fund continues to review a number of promising companies for possible investment.

Dr. James McCarter, who had been a group leader of Parasitic Nematode Sequencing at the Genome Sequencing Center at Washington University, is president and founder of Divergence. Rapp formerly worked on mergers and acquisitions at Monsanto. He joined Divergence last year after the company received its first round of venture financing.

"One of the exciting things about our research is it's applicable in both plant and animal (nematodes)," he said. The research focuses on the genetic makeup of the parasites, "so there's a pretty good chance if we have a solution for one species, it will work on many species."

Divergence, based in the Nidus Center, is several years away from having a product it can bring to market, Rapp said. Prolog was the only venture firm that invested in Divergence, Rapp said, though individual investors familiar with nematode research have invested in the company.

RELEASE: ©2002 St. Louis Business Journal, By: Rick Desloge, rdesloge@bizjournals.com. All rights reserved.