Vascular Pharmaceuticals Inc., of Chapel Hill, N.C., closed two deals encompassing the alpha and the omega of its existence.

First, it announced the successful completion of a $16 million Series A equity financing co-led by Intersouth Partners and MPM Capital to continue development of its monoclonal antibody, VPI-2690B, for diabetic nephropathy.

While for many biotech companies, a Series A financing might be the beginning of an exciting and uncertain future, Vascular Pharma's second announcement on the same day revealed that the fledgling company already has its exit strategy in the bag.

It signed an agreement with Janssen Biotech Inc., granting the Johnson & Johnson subsidiary the exclusive right to acquire Vascular Pharma following completion of its planned Phase II study.

Vascular Pharma will receive an up-front payment and milestone payments in exchange for the acquisition rights.

"We're extremely excited to be able to aggressively move the program forward and to be able to partner with top-tier capital funds as well as biotech to make this program a reality," Vascular Pharma CEO Richard Shea told BioWorld Today.

Shea said the company had been formed in late 2005, but until this point had operated "very much in a virtual mode."

VPI-2690B is designed to target the insulin-like growth factor I (IGF-1) pathway by binding to the alphaVbeta3 receptor, which inhibits IGF-1-mediated smooth muscle cell proliferation in response to hyperglycemia. That smooth muscle cell proliferation is related to plaque development in the vasculature.

The VPI-2690B antibody is designed to stick to a different binding site than the commonly-targeted RGD binding site of alphaVbeta3.

In animal models, VPI-2690B reversed the development of proteinuria and prevented histological changes in the kidneys of diabetic animals. Those preclinical studies in pig and rat models have been carried out at Chapel Hill School of Medicine, and are being prepared for publication in a peer-reviewed journal.

Vascular Pharma is in the process of humanizing the murine antibody and preparing for Phase I trials, to be followed promptly by Phase II studies.

"We're currently beginning our IND-enabling preclinical program. We're targeting filing our IND by the second half of 2013, commencing clinical trials thereafter," Shea said.

Vascular Pharma expects its funding to last through completion of Phase II, getting the company to the point where Janssen may exercise its option. If it does, then the $16 million Series A will be the only equity financing that the company needs.

"I wouldn't want to speculate on what Janssen may or may not do," Shea said. "That's one scenario that may unfold."

According to Vascular Pharma, 24 million people in the U.S. have diabetes, and another 57 million have pre-diabetes, at an annual health care cost of $116 billion.

The chronic hyperglycemia of diabetes accelerates the formation of atherosclerotic plaques resulting in complications of diabetes including coronary artery disease, peripheral artery disease, diabetic retinopathy and poor renal function.

The current standard of care for those vascular complications is statin therapy such as Crestor (rosuvastatin calcium, AstraZeneca plc) and Lipitor (atorvastatin, Pfizer Inc.) to lower blood cholesterol levels. But that approach leaves much to be desired in terms of reversing damage done.

Stents and coronary artery bypass grafts also are used, but are subject to high rates of restenosis (greater than 50 percent), and are not able to address disease in smaller arteries.

Vascular Pharma previously funded its program through small business technology transfer grants from the Department of Health and Human Services and through a nonequity-based partnership with a pharmaceutical partner.

The company is laser-focused on its initial indication of diabetic nephropathy, but Shea said other, related vascular indications are possible for the antibody.

"Although our current clinical plan that is funded is specifically to advance the program in diabetic nephropathy, the drug has shown impressive animal results in other diabetic complications, including accelerated atherosclerosis and diabetic retinopathy," Shea said.

Interest in Diabetic Nephropathy Widespread

According to Shea, there is no head-to-head competition from other products targeting the same cellular pathway or mode of action. There are other players, however, in the field of diabetic nephropathy.

Genkyotex SA, of London, recently raised $26 million to extend a series C financing to develop its NOX-1 and NOX-4 inhibitor, GKT137831, for diabetic nephropathy. That drug has progressed to a Phase Ib multi-ascending dose study, and Phase II is expected to begin by the end of 2012. (See BioWorld Today, July 11, 2012.)

Noxxon Pharma AG, of Berlin, treated its first patient in June 2012 in a Phase IIa trial of NOX-E36, an anti-CCL2/MCP-1 drug. That 12-week trial will evaluate the efficacy of the subcutaneous injections of 0.5 mg/kg of NOX-E36 twice weekly compared to placebo in about 50 patients.

Pharma giants Boehringer Ingelheim GmbH, of Ingelheim, Germany, and Eli Lilly and Co., of Indianapolis, have thrown their hats into the ring, as well. They reported results from a post-hoc analysis of a trial of Tradjenta (linagliptin) in Type II diabetes patients showing a 29 percent reduction in urinary albumin-to-creatinine ratio with linagliptin plus angiotensin-converting enzyme inhibitors (ACEs) and angiotensin receptor blockers (ARBs) vs. ACEs and ARBs alone at 24 weeks. They presented those data at the American Diabetes 72nd Annual Scientific Sessions in Philadelphia in June.

In other financings news:

• 3SBio Inc., of Shenyang, China, said its board received a nonbinding proposal letter from Chairman and CEO Jing Lou and CPE China Fund LP to acquire the company's outstanding shares in a going private transaction valued at $15 per American Depositary Share in cash, subject to certain conditions. CPE China Fund is an exempted limited partnership registered in the Cayman Islands and a China-focused private equity fund associated with CITIC Private Equity Funds Management Co. Ltd. The buyers intend to finance the acquisition through a combination of debt and equity capital and said an unnamed financial institution expressed interest in financing the proposed acquisition. 3SBio's board formed a special committee of independent directors to consider the proposal. On Wednesday, the company's shares (NASDAQ:SSRX) gained $1.85, or 16 percent, to close at $13.44.

• Sequenom Inc., of San Diego, priced its private offering of $110 million in convertible senior notes due in 2017. Sale of the notes is expected to close Sept. 17. Sequenom granted initial purchasers a 30-day option to buy up to an additional $20 million of the notes to cover overallotments. The convertible notes will bear interest at a fixed rate of 5 percent annually and will mature Oct. 1, 2017, unless earlier converted, redeemed or repurchased. The conversion rate initially will be 216.0644 shares of common stock per $1,000 principal amount of notes, equivalent to an initial conversion price of approximately $4.63 per share of common stock. The company plans to use the proceeds to fund the commercialization of its MaterniT21 PLUS laboratory-developed test and for other corporate purposes. On Wednesday, Sequenom's shares (NASDAQ:SQNM) gained 28 cents, closing at $3.91.