AGI Therapeutics, a fledgling speciality pharmaceutical company, has raised €9.5 million to fund a series of drug trials.

The sum is believed to be the largest raised by an Irish life sciences company in a first round of fundraising.

The private funding round was led by ACT Venture Capital, which contributed €3.5 million. It was supported by specialist Irish life sciences venture capital group Seroba BioVentures, Delta Partners and New York-based Merlin Biomed.

AGI will use the money to put four of its six pipeline products through phase II clinical trials over the next two to two-and-a-half years. All are drugs that were previously approved for other treatments.

The relevant patents have now expired and AGI is reformulating the compounds to tackle a new range of conditions.

Mr Alan O'Connell, a spokesman for Seroba BioVentures, said the products being developed by AGI addressed a "significant unmet clinical need".

"The whole gastroenterological area has been relatively neglected by the pharmaceuticals industry," said Mr O'Connell.

ACT Venture Capital managing director Mr Niall Carroll said: "We are delighted to be leading this fundraising. It is a big amount of money for an early stage company but that is the nature of this business. Most of the money will go to getting the clinical trials done."

AGI was founded by a group of former Elan executives and is investigating treatments for a series of gastroenterological conditions.

The team is headed by chief executive Dr John Devane, formerly executive vice-president of research and development at Elan. He has also established a pharmaceutical company, Athpharma, which develops products for cardiovascular disease.

Dr Mary Martin, who was managing director of Elan's drug delivery research strategic unit, is AGI's chief operating officer.