Washington Editor

Ocera Therapeutics Inc. raised $12 million in a second round of financing to continue the clinical development of its first product, AST-120, which already is in Phase III.

That pivotal trial began just a few months ago to study the compound's use in treating fistulizing Crohn's disease. Made of orally delivered carbon microspheres that absorb toxins in the gastrointestinal tract, it has been tested in that indication for a decade and sold overseas for even longer in other indications.

The San Diego-based biopharmaceutical company, which was founded just a year and a half ago, is focused on gastrointestinal and liver diseases. It has raised $26.5 million in private backing to date.

President and CEO Laurent Fischer attributed the growing investor interest to AST-120's late stage of development "in an attractive market." Phase III data are due at the end of next year, he told BioWorld Today. Noting that the funding round drew more interest than the company could accommodate, Fischer added that it was completed in "a matter of weeks."

The latest funding should last through the end of next year.

Crohn's disease data reported at May's Digestive Disease Week meeting demonstrated a significant reduction in the number of draining fistulas among AST-120-treated patients compared to those who received placebo. Those findings, from a double-blind, placebo-controlled Japanese study, were reported by Kureha Corp. Ocera has rights to the compound through a license from the Tokyo firm.

Already marketed in Japan to delay the time to dialysis and reduce uremic symptoms in patients with chronic kidney disease, it has a well-established safety profile through 15 years of commercial use.

The U.S. market for AST-120 in Crohn's disease is fairly sizable. It is estimated that 500,000 people have the condition, and up to 40 percent of them suffer from draining fistulas.

Ocera's Phase III study is recruiting 240 patients and randomizing them to receive treatment or placebo. Its primary endpoint is testing AST-120's ability to cut the number of draining fistulas in half after four weeks and eight weeks of treatment. Recruitment in the U.S. has been somewhat slow, but the addition of European sites has quickened the pace of enrollment. (See BioWorld Today, May 25, 2006.)

Secondary endpoints include measures of the product's effect on non-draining fistulas, absolute numbers of draining fistulas, changes in Crohn's Disease Activity Index and Pouchitis Disease Activity Index scores from baseline, the time to relapse from success at eight weeks, the average frequency of liquid bowel movements during the first eight weeks, changes in CRP levels from baseline, treatment failure due to drug therapy switches and safety.

A second Phase III study will follow this one, which is expected to complete enrollment in the middle of next year. A new drug application could come in the first half of 2009, Fischer said.

Other areas of therapeutic focus for AST-120 include irritable bowel syndrome, following preclinical studies that have demonstrated its potential in adsorbing substances involved in the condition's pathophysiology, as well as liver diseases. Fischer said early clinical data in those areas could be available by the end of next year.

While additional in-licenses are envisioned for the future, he noted that Ocera has no such near-term plans.

Its Series B round was led by an investment firm new to the company, Sofinnova Ventures, and included participation from its founding backers, Domain Associates LLC in Princeton, N.J., and Thomas, McNerney and Partners LLC in Minneapolis. As part of the financing, San Francisco-based Sofinnova's Mike Powell joined Ocera's board.

In other financing news:

• Protalex Inc., of New Hope, Pa., raised about $15.2 million in gross proceeds from a private placement of 6.1 million common shares and 1.5 million warrants. The company said the funding would speed its development efforts around PRTX-100 for idiopathic thrombocytopenic purpura, rheumatoid arthritis and other autoimmune indications. Investors included LBI Group Inc., vSpring Capital, CIDC Inc., Emerging Technology Partners, as well as additional selected institutional and accredited private investors. Griffin Securities Inc. served as the lead placement agent.

• BioSante Pharmaceuticals Inc., of Lincolnshire, Ill., raised about $7.6 million in a private placement of about 3.8 million common shares at $2 apiece, as well as warrants for a little more than 1.3 million shares exercisable at $2.75 each. The company said it would use the funds for Bio-E-Gel, a menopause treatment under review by the FDA, to begin Phase III trials of LibiGel for female sexual dysfunction, and for general corporate purposes. BioSante said the new cash combined with existing reserves would sustain operations for at least the next year. Investors included Perceptive Life Sciences, Quogue Capital, Hunt BioVentures LP, Mallette Capital Management Inc., Valesco Capital Management and entities affiliated with Paramount BioCapital. Rodman & Renshaw LLC served as placement agent for the transaction, which is expected to close upon approval of an additional listing application with the American Stock Exchange.