Washington Editor

PainCeptor Pharma Corp. raised C$24.4 million (US$20.7 million) in a Series B round of financing, largely to advance its two lead pain programs into clinical development.

The Montreal company's president and CEO, Louis Lamontagne, attributed the investor interest to multiple factors. One is that PainCeptor is on the cusp of starting human trials, which plays to venture capitalists' preference for relatively later-stage projects. Another is that its pain research centers on an area in need of new drugs, and lastly, he said the company's seasoned management team is attractive to investors.

"In the Canadian context, this is a very large private placement," Lamontagne told BioWorld Today, "so we're quite pleased with that." To date, PainCeptor has raised $47 million in total venture capital funding. Its latest proceeds should last about two years, he said, providing enough of a runway for completing a Phase II study in one program and possibly finishing another.

"We are definitely going to be able to establish human proof of concept in our targets with that money," Lamontagne added, noting that the company's lead therapeutic programs, which are positioned at targets within the peripheral nervous system, are "neck and neck" in late preclinical development and on track to enter Phase I testing later this year. "There are just a few studies to wrap up and then we should be able to file for our Phase I trials."

One antagonist program targets NGF (nerve growth factor), and the other ASICs (acid sensing ion channels). Each approaches pain treatment without manipulating the central nervous system or brain receptors to avoid deleterious side effects such as addiction and brain toxicities. Instead, the NGF and ASIC receptors represent "the first line" of those triggered by physical, chemical or thermal pain stimuli, Lamontagne said. "ASICs and NGF are at the very beginning of the pain cascade" of receptors activated to send a signal to the brain.

Early in the programs' human testing, healthy volunteers would be used for establishing clinical efficacy through established models of pain "that are fairly predictive," Lamontagne said, "so you can get an idea of your compounds' efficacy, or some preliminary ideas." That will be particularly important for ASICs, he added, because it is not yet a validated pain target in humans, as opposed to NGF.

PainCeptor is focused on oral small molecules, though topical or subcutaneous formulations also might find use, for the long-term treatment of chronic pain. The company has full rights to both programs and at some point down the road is likely to seek an alliance or partnership. It also plans to direct a portion of its latest funding to expand its intellectual property portfolio and enhance its product pipeline. Investors included Desjardins Venture Capital, of Montreal; CDP Capital, managed by VantagePoint Venture Partners in San Francisco; T2C2/Bio 2000, of Montreal; Business Development Bank of Canada, a federal government entity whose Montreal office managed the purchase; and Lothian Partners 27 SICAR in Belgium.

In other financing news:

• TransOral Pharmaceuticals Inc., of Port Richmond, Calif., raised $40 million in a Series D financing to fund development of its insomnia drug Intermezzo through regulatory filing in the second half of next year. The product, a low-dose, sublingual formulation of zolpidem, is the company's lead candidate for treating patients who awaken in the middle of the night and have difficulty returning to sleep. TransOral recently completed a pivotal study of the drug. Additional therapeutics in development at the company include products for alcohol dependence and migraine. Its investor syndicate was led by New Enterprise Associates, a new backer, and included follow-on investments by New Leaf Venture Partners, Montreux Equity Partners, InterWest Partners, Hamilton BioVentures, Vivo Ventures and Peninsula Equity Partners.

• Cardium Therapeutics Inc., of San Diego, is raising about $21.5 million in gross proceeds after entering definitive purchase agreements for the sale of stock and warrants to institutional and other accredited investors. The company plans to use funds to begin a Phase III study of Generx (alferminogene tadenovec), a DNA-based growth factor therapeutic being developed to promote and stimulate the growth of collateral circulation in the hearts of patients with ischemic conditions; to initiate a Phase IIb study of Excellarate, a DNA-activated collagen gel for the topical treatment of severe chronic diabetic wounds; to further its temperature-modulation technology; and for general working capital. Cardium is issuing about 8.6 million common shares at $2.50 apiece with 35 percent warrant coverage, which represents up to an additional 3 million shares. The warrants have a five-year term and are immediately exercisable at $3.75 per share. Oppenheimer & Co. Inc. is placement agent for the financing, which is expected to close Friday.

• Cylex Inc., of Columbia, Md., completed a final close on its third round of private financing, which raised a total of $20.5 million, following an investment from Siemens Venture Capital GmbH and other private investors. Cylex is developing products that use the immune system for predicting and managing human health, including an FDA-approved cellular assay of immune system function, ImmuKnow, which measures the vitality of a patient's immune system from a single drop of blood. Channel Medical Partners and Canaan Partners co-led the offering. Asante Partners acted as Cylex's adviser.

• ReGen Biologics Inc., of Franklin Lakes, N.J., raised $3 million after completing a private equity placement. The company sold 71,429 shares of restricted Series D convertible preferred stock at $42 apiece, and issued five-year warrants equal to 30 percent of the purchased shares, representing 21,429 shares exercisable at $63 apiece. The transaction also includes options to purchase the number of preferred shares bought at closing, exercisable at $42 per share, within 15 days of FDA clearance of ReGen's collagen scaffold device.