Barely two weeks after Merck & Co. Inc. completed its acquisition of NovaCardia Inc., the ex-NovaCardia management team raised $20 million to kick-start operations for spin-out Sequel Pharmaceuticals Inc.

Investors in the Series A financing included Domain Associates, Forward Ventures, InterWest Partners, Montreux Equity Partners and Skyline Ventures, all of which previously invested in NovaCardia. Randall Woods, current president and CEO of Sequel and former president and CEO of NovaCardia, said the start-up received inquiries from several new investors that "would have liked to participate" in the financing, but the Sequel team decided to stick with its familiar syndicate.

As its name implies, San Diego-based Sequel has more in common with NovaCardia than investors and management. Woods called the business plans for the two companies "identical."

Like its predecessor, Sequel will license cardiovascular drugs for acute, hospital-based use, with a focus on indications like atrial fibrillation and congestive heart failure. In fact, lead product K201 (JTV-519) hails from NovaCardia.

Merck's acquisition of NovaCardia for $350 million in stock included the Phase III congestive heart failure drug KW-3902 but not the earlier-stage atrial fibrillation drug K201. (See BioWorld Today, July 26, 2007.)

"Other potential suitors wanted K201, but we were able to negotiate with Merck to keep it," Woods said.

Now, Sequel is planning a pair of Phase II trials with the intravenous formulation of the drug for acute atrial fibrillation. The first trial is slated to begin by the first quarter of 2008 and conclude before the end of the year. The Series A financing is intended to carry Sequel through those trials, Woods said.

Sequel believes K201, which modifies ion currents through potassium, sodium and calcium channels, may be able to treat atrial fibrillation without causing side effects such as ventricular arrhythmias that often are associated with current therapies.

In previous trials, the drug was generally well tolerated at a range of dose levels and caused no significant adverse events. An oral formulation of K201 for the chronic treatment of atrial fibrillation also is in development.

Cardiome Pharma Corp., of Vancouver, British Columbia, and Astellas Pharma US Inc., of Deerfield, Ill., also are working on a drug for atrial fibrillation.

Their intravenous formulation of vernakalant hydrochloride has been submitted for FDA approval and is scheduled for review by a Cardiovascular and Renal Drugs Advisory Committee panel in December. Paris-based Sanofi-Aventis Group also is hoping for an approval with its atrial fibrillation drug Multaq (dronedarone), which received a non-approvable letter last year. (See BioWorld Today, Sept. 5, 2006, and June 5, 2007.)

Earlier in the atrial fibrillation pipeline are ATI-2042, an oral drug in development by ARYx Therapeutics Inc., and INO-8875, an adenosine-1 agonist in development by Inotek Pharmaceuticals Corp.

Beyond K201, Sequel plans to license additional drug candidates to fill its pipeline. Again, the strategy mirrors that of NovaCardia, which licensed KW-3902 from Tokyo-based Kyowa Hakko Kogyo Co. Ltd. and K201 from the Japanese firm Aetas Pharma Co. Ltd. Eckard Weber, partner at Domain Associates, said Sequel will look at licensing opportunities in Japan and elsewhere.

The strategies employed by NovaCardia "created a lot of value with KW3902," Weber added. That drug was licensed for $2.4 million up front and $19.5 million in potential milestones, so even after considering the $88 million NovaCardia had raised in venture capital to support its development, selling for $350 million created "a very good investment," he said.

With the same team in place once again and another promising product candidate, it's "the best of both worlds," Weber said.

In other financing news:

• BioMicro Systems Inc., of Salt Lake City, raised an estimated $5.5 million in a Series B financing, bringing its total funds raised to date to $10 million. Investors included vSpring, Nanostart AG and Staley Capital Advisors Inc. Proceeds will be used to broaden BioMicro's portfolio and expand its MAUI Hybridization microarray product line.

• Corium International Inc., of Menlo Park, Calif., completed a $25.1 million Series C financing. Essex Woodlands Health Ventures led the round, which also included participation by Quantum Technology Partners, Aphelion Capital and an unnamed strategic investor. In a related transaction, Essex portfolio company StrataGent Life Sciences Inc., of San Jose, Calif., merged into Corium, adding its needle-free drug delivery technology to Corium's transdermal delivery technology. Corium and Essex also set terms for a $15.2 million Series D financing to occur within 24 months.

• InterMune Inc., of Brisbane, Calif., closed its previously announced public offering, generating estimated net proceeds of $73.8 million excluding offering expenses. The company originally planned to offer 3.5 million shares at $19.50 per share, but ended up selling 4 million shares as well as its 525,000 share overallotment. Proceeds will support InterMune's pipeline in idiopathic pulmonary fibrosis and hepatitis C virus infection. (See BioWorld Today, Sept. 24, 2007.)

• Nanobac Pharmaceuticals Inc., of Tampa, Fla., said its board of directors approved an interim debt financing that will carry the company through the end of the year, at which point it expects to complete a significant financing to support its work with calcifying nanoparticles. The board also approved a stock buy-back program that will include up to 20 percent of the outstanding float over the next year. Nanobac's shares (OTCBB:NNBP) rose 5 cents, or 40 percent, to close at 17 cents on Thursday.

• Sagent Pharmaceuticals Inc., of Schaumburg, Ill., closed a $53 million Series A financing from Vivo Ventures. Proceeds will be used to fund regulatory filings and marketing of Sagent's specialty pharmaceutical products. The company focuses on injectable products that can be approved with an abbreviated new drug application.