Israeli biotechnology firm Atox Bio, developing a drug it hopes can treat severe infections such as those caused by flesh-eating bacteria and deadly viruses, expects to ask investors for more money this year to fund extended phase II trials.

Chief executive Dan Teleman also told Reuters on Tuesday he expected to have results of current clinical trials by year-end.

Atox Bio has been conducting Phase II clinical trials at seven medical centres in the United States where 40 patients with flesh-eating bacteria, or necrotizing soft tissue infections (NSTI), have been treated.

It plans to begin an expanded Phase IIb trial to examine longer-term effects of its drug next year and hopes to submit it for U.S. Food and Drug Administration approval in 2017.

The molecule has been designated by the FDA as an orphan drug, a status with several potential benefits such as an expedited regulatory process and tax credits.

Atox Bio has raised over $12 million from grants from the National Institutes of Health (NIH) and the U.S. Defense Department's Defense Advanced Research Projects Agency as well as $7 million from a private U.S. investor and Netherlands-based Esperante Ventures.

Though the infections it seeks to treat are diverse, Atox Bio said they had one thing in common: the powerful immune response they elicit in the patient, known as an immune storm.

"It is an inflammatory response that is very strong and greatly exaggerated over a normal response. It induces phenomena like organ failure, shock and death," chief scientific officer Raymond Kaempfer said. "Patients get killed by their own immune response rather than by the virus."

This type of reaction can also be seen in hantavirus, ebola and severe strains of influenza, he said.

Some 10,000 people who stayed in tent cabins at Yosemite National Park this summer may be at risk for the deadly rodent-borne hantavirus, according to the U.S. Centers for Disease Control and Prevention.

Kaempfer said his team developed a potent molecule targeting immune cells that blocks the toxic consequences of these infections. There have been no signs in the study that the molecule is dangerous, he said.

The mortality rate of NSTI is about 15%. Teleman said the only current treatment is surgery - usually multiple surgeries - and 20% of patients undergo amputation.

In the United States there are 21,000 cases annually and treating patients can cost from $100,000 to $2 million.

If the drug delivered benefits such as a reduction in the time spent in intensive care and the overall length of stay in hospital as well as fewer surgeries it should allow Atox Bio to charge a premium price, Teleman said.

"The market potential for the initial indication could be several hundred million dollars a year," he said.

Atox Bio also aims to study other types of severe infection, with peritonitis the next one planned.

While animal models have shown the drug can be effective in treating viruses such as bird and swine flu, Teleman said it was hard to translate that into clinical development plans as the diseases are not common, making it hard to recruit patients.

"We would aspire to do this in conjunction with the appropriate U.S. agencies such as the NIH," he said. "They have the resources."