Specialty pharmaceutical company EKR Therapeutics Inc. raised more than $13 million in a Series C financing, a portion of which it used to acquire the marketed pain product DepoDur (morphine sulfate extended-release liposome injection) from Pacira Pharmaceuticals Inc.

Stuart Levine, an EKR spokesman, said the $13 million in Series C funding is "additive" to cash the company had on hand. Including the current round, Cedar Knolls, N.J.-based EKR has raised more than $21 million since its founding in 2005.

A combination of existing and Series C funding was used to acquire exclusive marketing and distribution rights to DepoDur in the Americas, although some of the Series C funding also will be used to support EKR's "ongoing business," Levine added.

Terms of the acquisition were not disclosed, but Levine said the deal involved an up-front payment, potential milestones and royalties.

New investor Quaker BioVentures led the financing round, with participation from new investors Merrill Lynch Capital Healthcare Finance Group and the Garden State Life Sciences Venture Fund, which is managed by Quaker. Existing investors NewSpring Capital and ESP Equity Partners also joined in. Quaker partner Adele Oliva will join EKR's board of directors.

Although Quaker is a new investor in EKR, Oliva was familiar with the company's chairman and CEO, Howard Weisman. In her previous position at Apax Partners, Oliva invested in ESP Pharma, a company co-founded by Weisman and later sold to PDL BioPharma Inc. for $475 million. (See BioWorld Today, Jan. 26, 2005.)

Levine said the ESP and EKR business models are "very similar." Both companies acquire products to market to hospitals, although ESP had somewhat more of a cardiovascular focus, while EKR intends to focus more on oncology supportive care therapeutics.

EKR's first product, Gelclair, is a bioadherent oral gel indicated for the management of pain associated with oral mucositis and stomatitis, conditions that often result from chemotherapy and radiation treatment. EKR acquired North American rights to the drug from Helsinn Healthcare SA, and Levine said sales are "meeting if not exceeding expectations."

Gelclair is marketed with a 15-member sales force, but Levin predicted EKR may expand to 20-25 reps when it begins selling DepoDur early next year. The product was approved to treat pain following major surgery in 2004 and originally was marketed by Endo Pharmaceuticals Inc., which had licensed North American rights from SkyePharma plc. (See BioWorld Today, Jan. 6, 2003.)

Despite being the only extended-release opioid analgesic FDA-approved for epidural use, sales of DepoDur were disappointing, bringing in only $1.6 million in the first half of 2006. Endo terminated its license to the product, which SkyePharma subsequently sold along with the rest of its injectable drugs business to Blue Acquisition Corp., which created Pacira. (See BioWorld Today, Jan. 10, 2007.)

Levine said Endo "laid down a nice foundation" for DepoDur, which EKR intends to build upon by focusing on the product's ability to provide up to 48 hours of pain relief with a single injection without the potential complications of a catheter. Pre-launch activities are ongoing.

Levine said EKR also is "involved in a variety of discussions" regarding future product acquisitions. For now, the company is focused on products that have completed clinical development, but once the business model begins to turn a profit, Levine said EKR may look at Phase III and maybe even some Phase II products.

In other financing news:

• Isolagen Inc., of Exton, Pa., is raising $13.8 million through a registered direct offering of 6.76 million shares at $2.04 per share, the company's closing share price on Tuesday. The offering is expected to close Friday, and proceeds will support the company's skincare products. Isolagen also withdrew previous SEC filings relating to a proposed exchange offering and a new senior convertible notes offering.

• NeoStem Inc., of New York, raised $6.3 million in a public offering to drive its business of collecting, processing and storing stem cells from healthy adults. The company sold 1.27 million units, each consisting of one share of common stock and half of a five-year warrant to purchase another share at $6. Mercer Capital Ltd. underwrote the offering. NeoStem began trading publicly earlier this month (AMEX:NBS). The company's share price fell 72 cents, or 12 percent, to close at $5.25 on Wednesday.