Local vaccine technology company Hawaii Biotech Inc. filed for bankruptcy yesterday after running short of cash needed to sustain research and clinical trial work.

The 'Aiea-based firm, one of Hawai'i's highest-flying tech companies fueled by controversial state tax credits, plans to continue operations and reorganize its finances under Chapter 11.

"Our goal is to continue to build on our recent clinical successes and create value for all shareholders," Elliot Parks, Hawaii Biotech president and CEO, said in a statement.

"We believe that this reorganization is the best plan of action to attract additional capital, to keep Hawaii Biotech local and to continue progressing through our clinical trials."

Hawaii Biotech, established in 1982 by a group of University of Hawai'i scientists and business professors, had raised more than $50 million from federal grants and several million dollars in private equity investments since its inception.

But raising enough capital to continue human trials for West Nile and dengue fever vaccines proved difficult.

"They just ran out of money," said Jerrold Guben, a local bankruptcy attorney representing Hawaii Biotech. "All these biotech companies just burn cash with no revenue coming in. The burn rate is so high you simply have to have a money machine."

As part of its bankruptcy plan, Hawaii Biotech is seeking permission from U.S. Bankruptcy Court to invest about $2 million from local investors including Mark H. Bogart to maintain operations.

The financing, if approved, would give the investors more security in the company with the right to be repaid ahead of older investments.

Hawaii Biotech estimated its debts at between $1 million and $10 million. The company's largest unsecured creditor is its landlord, Redico, with a $500,929 claim for rent, followed by Goodsill Anderson Quinn and Stifel with a $119,443 claim for legal expenses.

Hawaii Biotech's efforts focus on developing vaccines by extracting certain proteins from DNA that can be used to produce a vaccine. The process is different from most companies that produce vaccines by using pathogens that are no longer virulent to induce an immune response when injected.

There had been pro-spects for Hawaii Biotech to raise capital last month, but a tentative deal for $3 million from a Mainland venture capital firm fizzled. A minority faction on the company's board of directors opposed the investment, and has been trying to reorganize control of the company.

The internal struggle was publicized last month by William Ardrey, CEO of the Australia-based company Acuvax Ltd. that owns 28 percent of Hawaii Biotech.

Ardrey criticized Hawaii Biotech management for not pushing hard enough to generate revenue from its vaccine development work, and called for Parks to be removed from the board of directors along with Debra Guerin Beresini, managing director of a Silicon Valley-based venture capital fund that has invested in Hawaii Biotech.

A shareholder meeting to consider the proposal is scheduled for Wednesday.

Hawaii Biotech has called Ardrey's move reckless, and said the company is on the correct path to generating revenue that already has included $1 million in licensing proceeds.

Ardrey could not be reached for comment yesterday. Formerly known as Avantogen Ltd., Acuvax is a holding company without significant operations other than owning stakes in other companies, and itself is in weak financial condition with the need to raise capital and a stock price that closed yesterday at 1.6 Australian cents.

At one time, Acuvax owned half of Hawaii Biotech, but has seen its investment diluted by other investments.

Ardrey's ally on the board is Michael Spooner, an adviser and director of successful biotech companies in Australia.

The fifth Hawaii Biotech board member, Rob Robinson, has expressed support for Parks, a former venture capitalist with Ventana Capital whose hiring last year stemmed from a 2007 investment in Hawaii Bio-tech that led to the formation of a new board.