BioWorld International Correspondent

Zealand Pharmaceuticals A/S raised €13.3 million (US$17.3 million) in a new financing round that will enable it to continue Phase II development of its aquaretic compound ZP120, which is designed to relieve fluid overload in the lungs of patients with acute heart failure.

The cash also will allow the Glostrup, Denmark-based firm to move into a Phase I trial an analogue of the hormone glucagon-like peptide-2 (GLP-2), in development for chemotherapy-induced diarrhea.

The cash brings the company's total funding to about €50 million, said Chief Financial Officer Jakob Dynnes Hansen. The transaction was led by existing investor BankInvest. Existing shareholders LD Pension and Dansk Erhvervsinvestering also participated, while the sole new investor was Vaekstfonden. In addition to providing new equity financing, the latter also converted around €3 million of a pre-existing loan to equity.

ZP120 is a modified form of the peptide hormone nociceptin, which is expressed in the central nervous system, and is involved in regulating pain and analgesia and in other processes. Its action in the kidney, where it acts as a diuretic, has received less attention, Hansen said. "We have modified nociceptin to inhibit the CNS effects while maintaining the effect on the kidneys," he said.

That represents a new mechanism of action for diuretic treatments. Moreover, in contrast with available therapy, ZP120 appears to protect against electrolyte loss. Zealand Pharma already has completed a Phase II trial evaluating safety and tolerability in 36 subjects. It aims to commence a Phase II efficacy study toward the end of the quarter. That would be followed by an expanded Phase II dose-finding study, which would begin in the fourth quarter. The plan is to move the compound into a Phase III trial before the end of the second quarter next year. The company aims to sign up a development and marketing partner before then.

"We definitely want to be involved all along, including the marketing. When we get to Phase III we definitely want to partner it because we don't think we can run the full Phase III program," Hansen said.

The product is aimed at an indication that results in 9 million incidents requiring treatment each year, one-third of which result in hospitalization.

"I'm absolutely certain that this will go beyond half a billion euro in peak sales," Hansen said.

ZP120 now is the company's lead program, following out-licensing deals last year involving two other compounds. Sanofi-Aventis Group, of Paris, took on development of ZP10, a GLP analogue in development as a Type II diabetes treatment. Wyeth, of Madison, N.J., has licensed ZP123, a modulator of gap junction proteins in development as a treatment for ventricular arrhythmia.

Despite those successes, raising the new cash was difficult. Zealand Pharma will receive its new funding in two installments, separated by about nine months, and the second injection will be tied to certain development milestones.

"It's still a tough time to go out and raise money in the current climate. We have achieved certain major commercial milestones, and still it was not easy," Hansen said. The company will continue to seek funding from international investors to advance preclinical programs.