A Norfolk biotech startup researching treatments for a serious side effect of COVID-19 recently received another funding boost.

ReAlta Life Sciences successfully closed on $20 million in new funding, the company announced April 28. The third round of series A financing will allow the researchers to continue developing anti-inflammatory treatments.

“We are very excited,” ReAlta CEO Ulrich Thienel said.

The funding round was led by Marathon Development Group, owned by Norfolk property developer Frank “Buddy” Gadams, Thienel said. Additional financial backing came from existing investors and new undisclosed regional investors. Previous local investors include Children’s Hospital of The King’s Daughters and Eastern Virginia Medical School.

The startup, which was founded in 2018 by EVMS and CHKD scientists, was originally researching a way to help newborns with hypoxic ischemic encephalopathy, or birth asphyxia — a condition where a lack of oxygen to the brain can cause brain damage or death.

However, a pause on nonessential clinical trials during the coronavirus pandemic led the company to explore if its leading drug candidate could be used to treat one of the most serious COVID side effects — acute lung injury, where the lungs become filled with fluid and patients experience breathing difficulty.

Now, ReAlta will be using the funding to finance ongoing studies in the U.S. and Mexico for acute lung injury applications. Additionally, the company has started a healthy volunteer study in Canada which will be used to study the effectiveness of the drug on birth asphyxia.

“That study will support the two phase 2 programs next year, including birth asphyxia for the babies and what we call hemolytic transfusion reaction,” Thienel said, referencing a serious complication that can occur after a blood transfusion.

Phase 2 studies, as defined by the Food and Drug Administration, are larger studies involving participants with the condition, rather than healthy volunteers.

Additionally, the funding will be used to support the second compound being developed by ReAlta. Thienel declined to go into details about the compound at this time but said the treatment would allow the company to expand into a new therapeutic area.

Finally, the additional capital would enable the company to hire several employees. Thienel estimated that the firm could hire up to 10 new employees by the end of 2021. ReAlta currently has 18 employees, he said.

ReAlta has raised a total of about $46 million from seed and series A funding, the chief executive said.

Trevor Metcalfe, 757-222-5345, trevor.metcalfe@insidebiz.com