Washington Editor

Not long after gaining a public listing, CepTor Corp. added capital through a $12 million stock-and-warrant sale and plans to use the proceeds for its lead product, Myodur.

The drug is in development for Duchenne's muscular dystrophy, and the Hunt Valley, Md.-based company is in the process of preparing an investigational new drug application to soon move it into human studies. CepTor CEO William Pursley said he hopes to hear from the FDA in the third quarter, after which the company would look to move immediately into the clinic.

"It's certainly the bulk of our focus here," he told BioWorld Today. "We are very motivated and very thrilled to even have the opportunity to possibly come out with something definitive for this horrible disease."

Myodur uses a carnitine carrier molecule to carry a leupeptin analogue into muscle cells to inhibit calpain, the chief culprit for skeletal muscles tissue degradation in Duchenne's muscular dystrophy. Pursley said the company hopes to have a product proved to stabilize the tissue balance in the disease. In aa mouse model, the drug has preserved the tissue from degrading.

"I don't think in any way, shape or form do we want to promise that we can reverse the disease," Pursley said. "What we're setting out to do now is to try to stabilize the disease where it is. So if this is a successful compound, early diagnosis would be critical, because hopefully with chronic therapy, a patient might have a chance to live a normal life."

For patients with Duchenne's muscular dystrophy, their average age of diagnosis is 3; they usually become bound to a wheelchair by 11 and die at about 20. No drugs are approved to treat the disease, though steroids are used to extend the time until a patient needs a wheelchair.

Pursley said he is unaware of other companies developing targeted inhibitors to attack the disease's underlying cause, the overexpression of calpain. The company has applied for orphan drug designation, as about 12,000 patients suffer from the disease in the U.S., and if it receives it that could help the development process move into the fast-track path.

CepTor's initial clinical plans for Myodur include Phase I/II trials that would be double-blinded, placebo-controlled studies designed to test escalating doses of the drug. Should results prove positive, Pursley envisions a single pivotal trial before filing for approval.

The company owns all rights to Myodur and intends to internally develop and commercialize all drugs it develops for orphan indications, save for the Pacific Rim. Outside of orphan indications, CepTor plans to seek worldwide partnerships for its cell-targeted therapeutic products. The company's platform technology includes the development of products for multiple sclerosis, retinal degeneration and epilepsy.

In addition to its Myodur plans, CepTor also might direct some of its latest proceeds to fund other working capital needs. Pursley said the financing would provide about 13 months worth of funding.

The private placement consisted of 480 units priced at $25,000 per unit, the maximum allotment per terms of the deal. Each unit consists of one share of Series A convertible preferred stock and a detachable warrant to purchase common shares in the company.

Each preferred share initially is convertible into 10,000 common shares at any time, and the warrants entitle the holder to purchase 5,000 common shares after the date of issuance. As of the offering's close, the preferred stock and warrants are separable.

The company went public in December through a reverse triangular merger with a public shell company, a real estate firm in Florida called Medallion Crest Management Inc.

CepTor agreed to file a resale registration statement with the SEC before the middle of this month, covering all common shares underlying the preferred stock and warrants issued in connection with the offering.

Brookshire Securities Corp., of Fort Lauderdale, Fla., is the transaction's exclusive placement agent.

Once the deal closes, CepTor will have about 16.1 million common shares outstanding. Among its owners is Xechem International Inc., of New Brunswick, N.J., from which Ceptor was spun out. Xechem originally bought the firm in December 2003. (See BioWorld Today, Dec. 31, 2003.)

On Monday, CepTor's shares (OTCBB:CEPO) closed at $6, unchanged.