Cleveland BioLabs chief executive Michael Fonstein has high hopes for the radiation sickness drug that the Buffalo-based life sciences company is developing.

If the company’s Protectan drugs prove to be effective and safe, they could become a big seller in military and cancer treatment markets that Cleveland BioLabs executives estimate to be worth more than $20 billion.

But that will take time — probably about two more years before its Protectan drug can win approval from federal regulators to protect soldiers against the harmful effects of radiation exposure.

“We are in the final lap of the development,” Fonstein said during the company’s annual shareholders meeting. “There are still a lot of t’s to cross and i’s to put dots on.”

Until then, the company will have to rely on funding that it raises from the government and investors. And those private funding efforts drew criticism Thursday from some of the company’s shareholders.

Three shareholders questioned the company’s recent push to raise $4.5 million in new funds that substantially diluted their own holdings.

One investor, Marty Meyerson, a former New York City investment banker, criticized the company’s outside directors — those who don’t work for Cleveland BioLabs — over the offering.

“We really haven’t been properly represented in this company for some time,” he said.

Another investor, Jeffrey Chokel, a former Cleveland venture capitalist who now lives in New Hampshire, said he was initially distressed by the low price of the shares sold during the recent offering.

Cleveland BioLabs, as a development- stage company, depends on the funds it raises from investors to finance its operations. The company’s revenues more than doubled last year to $4.7 million, but that covered

just a fraction of its $19 million in operating expenses during 2008, leading to a $14 million loss over the course of the year.

While Chokel said he believes the drugs that Cleveland BioLabs is developing hold great promise, he pressed company officials for more information about how much it will cost to complete their development and testing and also bring them to market.

Fonstein said the company’s flagship drug, the version of Protectan that will be earmarked for protecting soldiers, and eventually civilians, from radiation sickness, has sufficient funding from the U. S. Defense Department and the Department of Health and Human Services.

That military version could bring in orders for 1 million to 2 million doses from the U. S. military, as well as another 5 million to 20 million doses that could be stockpiled for civilian use in the United States. Other nations, such as Israel, could order millions more doses, he said.

Even more lucrative, potentially, is the medical market, where Protectan has shown promise as a way to ease the side effects of chemotherapy and other radiation-based cancer treatments. But the development and testing of Protectan for medical use is much farther away than the research into the drug’s military uses.

Cleveland BioLabs earlier this year completed the first phase of safety tests on healthy human volunteers — research used to determine potential side effects and dosage limits. The drug also has been tested extensively on non-human primates. A second, larger phase of human safety tests on as many as 500 volunteers could begin later this year, while additional testing on monkeys also will continue into next year.

If all goes well, the company could submit its application to the U. S. Food and Drug Administration for approval of Protectan by late next year, Fonstein said.