After completing a $5 million Series A financing last week, Nuon Therapeutics Inc. wasted no time in licensing worldwide rights to autoimmune and inflammatory uses of tranilast from Kissei Pharmaceutical Co. Ltd.

Rodney Pearlman, CEO of San Francisco-based Nuon, said he expects to initiate Phase II clinical trials with tranilast next year in rheumatoid arthritis and multiple sclerosis. Matsumoto City, Japan-based Kissei markets the drug in Japan and Korea for bronchial asthma, keloid and hypertrophic scarring, and allergic conjunctivitis.

Under the terms of the agreement, Nuon licensed autoimmune and inflammatory rights to tranilast outside of Japan and Korea, where Kissei retains the option to manage research, development and marketing for autoimmune indications. Kissei will supply tranilast to Nuon for clinical trials, and the two companies formed a collaborative relationship for the development of additional portfolio products. Financial terms were not disclosed.

Tranilast is thought to work through multiple anti-inflammatory mechanisms including inhibition of histamine release from mast cells; suppression of cytokine, leukotriene, prostaglandin and cyclooxygenase-2 expression; and inhibition of collagen deposits and keloid formation.

Nuon founder and Chief Scientific Officer Mike Selley became interested in tranilast when he saw research conducted by Larry Steinman of Stanford University using the drug in MS and by Marc Feldmann at Imperial College in London studying the drug in RA.

In MS, oral administration of tranilast reversed paralysis in mice with established experimental autoimmune encephalomyelitis. The drug also suppressed T cells and antigen-presenting cells and converted TH1-type T-cell responses into TH2 responses. In RA, tranilast reduced synovitis, cartilage loss and bone erosion in mice with established collagen-induced arthritis.

Both MS and RA are crowded markets. The MS space is dominated by disease-modifying blockbusters such as Avonex (interferon beta-1a, Biogen Idec Inc.), Copaxone (glatiramer acetate, Teva Pharmaceuticals Inc.), Betaseron (beta interferon 1b, Berlex Laboratories Inc.), Rebif (beta interferon 1a, Merck Serono), and Tysabri (natalizumab, Biogen Idec Inc. and Elan Corp. plc). The RA space also has its share of big-name blockbusters such as Enbrel (etanercept, Amgen Inc.), Remicade (infliximab, Centocor Inc.) and Humira (adalimumab, Abbott).

Yet Pearlman said tranilast will be differentiated from the competition by its oral administration, which will allow a "paradigm shift in dosing."

The drug also is "easy to manufacture," he said, resulting in a lower cost of goods than a comparable biologic therapy. And tranilast has a known safety profile established both by its use in Asia and through an 11,484-patient Phase III trial conducted by GlaxoSmithKline plc. Although the drug failed to prevent restenosis in that trial, the resulting data provided Nuon with a wealth of information.

Selley founded the company in 2002 as Angiogen but later changed the name to Nuon to reflect the idea of the "renewal of compounds," Pearlman said. Initial funding came through the founders and angel investors. The Series A financing, which was provided by Australian firm GBS Venture Partners, is expected to last through the rest of this year.

Before it gets low on funding, Nuon plans to raise a Series B round in the fall, and the company moved its headquarters from Australia to the U.S. to facilitate that effort. Pearlman said the Bay Area location also will help the five-person team hire experienced staff and conduct clinical and regulatory work.

In addition to hiring, fundraising and planning for clinical trials, Nuon is "looking at a number of opportunities" to build its pipeline, Pearlman said. Ideal compounds will have autoimmune or pain applications and clinical data available, although the company may consider some earlier-stage opportunities. Compounds that fit the bill are "very difficult" to find, but Pearlman noted Nuon is "interested" in several compounds in Japan.

Nuon is not the only start-up looking to Asia for licensing opportunities. Last month, Indigo Pharmaceuticals Inc. licensed cardiovascular drug INDI-702 (previously NM-702) from Nissan Chemical Industries Ltd. and Taisho Pharmaceutical Co. Ltd., both of Tokyo. Earlier this year, AureoGen Biosciences Inc. licensed several antibiotic compounds from Japan-based Takara Bio Inc., and AVEO Pharmaceuticals Inc. licensed an oral VEGF receptor inhibitor from Japan-based Kirin Brewery Co. Ltd.