Operations are well under way at PainCeptor Pharma Corp., a company just formed in a merger, as it concluded a Series A round of financing and secured its first development partner.

The Montreal-based company raised C$23 million (US$17.3 million) upon its formation through a merger between Antalium Inc. and Neuroceptor Inc. At the same time, PainCeptor entered a collaborative agreement with NeuroSearch A/S.

"After merging the two companies, we're going to take off from where they left off," PainCeptor CEO Louis Lamontagne said. "Both companies have preliminary drug candidates that we will submit to further testing in animal models of pain. There has been some testing done, so there is some proof of concept, but there are a couple of other models of pain that we would like to test."

As its name implies, the new company is working to develop therapeutic drugs for acute and chronic pain. Its first collaboration provides PainCeptor exclusive rights to complementary intellectual property. In exchange, Ballerup, Denmark-based NeuroSearch gained an equity stake that ultimately will be worth a little less than 10 percent of PainCeptor.

"We're developing a program between the two of us that will focus mostly on the technology that came from Antalium on acid-sensing ion channels," Lamontagne said, adding that the deal includes no up-front payments or royalties payable to NeuroSearch. PainCeptor will fund the program, to be carried out at NeuroSearch's facility, and will retain all rights on resulting products.

Operating from facilities in Montreal and Kingston, Ontario, PainCeptor plans to apply its first round of venture capital funding to advance its initial potential drug candidates through lead-optimization stages of development, as well as through subsequent preclinical phases expected to begin next year. Lamontagne said the programs are about 24 months to 30 months away from clinical trials, if all prior research advances according to plan.

PainCeptor is working to develop pain control drugs by targeting the initial events associated with the triggering of pain stimuli in the peripheral neurons. Such intervention occurs at the source of pain stimulus and avoids side effects in the central nervous system. Peripheral pain, which occurs outside the CNS, is associated with conditions such as tissue injury, cancer, infection and chronic inflammatory diseases, such as arthritis.

"The receptors we're targeting are in the peripheral neurons and are the first line of defense triggered by a painful stimulus," Lamontagne said. "By blocking these receptors, we can effectively block the transmission of the pain signals."

Because the small-molecule drugs do not interact with the CNS as opioids do, he added, they do not produce side effects such as dependence and toxicity. In the future, after the company advances its product candidates into clinical stages of development, it expects to partner them.

PainCeptor's formation stems from technologies developed by its privately held predecessor companies. Antalium was founded in 1999 by Kazimierz Babinski and Philippe Seguela, both of McGill University. Neuroceptor was founded a year earlier by Gregory Ross and Richard Riopelle, both of Queen's University. Those four individuals will serve on the management team at PainCeptor, which now has a total of 11 employees.

"Between the two companies, there are over 76 patents," Lamontagne said, noting that each company's programs would not cannibalize one another during development. "So that's very, very strong in terms of intellectual property, of which 46 or 47 patents are issued already worldwide."

He said such underlying intellectual property, coupled with prior proof-of-concept studies reflecting positively on their programs, made the merger attractive. And the resulting technological critical mass, Lamontagne added, made the combined company attractive to investors.

The funding should last about 30 months, Lamontagne said.

Led by CDP Capital-Technology Ventures, of Montreal, it included additional investments from the Montreal office of the Business Development Bank of Canada; Desjardins Venture Capital, also of Montreal; Canadian Medical Discoveries Fund Inc., of Toronto; T2C2/BIO 2000, also of Montreal; MDS Capital Corp., of Toronto; and Innovatech du Grand Montreal.