As the baby boomers age, many will face problems with memory they used to associate with their parents and grandparents.

And Saegis Pharmaceuticals Inc. (formerly David Pharmaceuticals), of Half Moon Bay, Calif., is working to develop drugs to meet the need as millions face the loss of memory and cognition associated with aging.

"The company wasn't founded on a platform technology," said Brent Vaughan, Saegis' director of corporate development. "It was founded on the idea of looking at MCI [mild cognitive impairment] and early Alzheimer's as specific indications separate from Alzheimer's disease and for which specific therapeutics could be developed."

One of the co-founders was current President and CEO Rodney Pearlman, who was senior vice president of MegaBios Corp, which became Valentis Inc., of Burlingame, Calif. Prior to that, Pearlman was a director in the pharmaceutical research and development department at Genentech Inc., of South San Francisco.

Founded in 1999, the company in-licensed three compounds in 2000 and 2001, two of which - DVD 742 and DVD 006 - were licensed from Novartis AG, of Basel, Switzerland. The third, DVD 111, was in-licensed from an academic institution in Russia.

Saegis - a combination of the words "sage" for wisdom and "aegis" for shield - is now completing a Phase II trial of DVD 111 in age-related cognitive decline (ARCD), a study that took place in the Netherlands. The company also is wrapping up a Phase II trial of DVD 742 for MCI in the United States.

However, Vaughan said that until partnering discussions are finalized, Saegis will not release any results of the studies. Vaughan also would not disclose the mechanism of action of the compounds.

"The key to the compounds is that all three have differing modes of action," Vaughan said. "And all three have shown in preclinical tests to be very safe and have shown positive efficacy in preclinical models."

The "real point that jumps out" from the programs is that the company in-licensed one compound in the fourth quarter of 2001, and it is now in a Phase II trial, he said.

"The partners that we've had to date have been very impressed with our ability to execute to plan for clinical development for Phase II human efficacy trials," Vaughan said. "In about 14 months, we were able to go from initiating a program for an in-licensed compound to completion of a Phase II with data available."

Vaughan said one way the company has been able to meet that schedule is single-mindedness. Unlike a big company, which may have resources to pursue many things, Saegis is focused.

"There's no lack of clarity for what [our] people need to be doing," he said.

Saegis has raised $14 million to date in its Series A round, completed in two tranches in the fourth quarter of 2001. Vaughan said the company is on target for that funding to carry Saegis through the first quarter of 2003.

The company is planning a Series B fund-raising round beginning later this year and into 2003, he said, but it hasn't determined what the goal of the round will be.

But the real aim is to develop drugs for the unmet medical need of memory loss.

"If we can treat these patients with very safe drugs that are also very efficacious - if we can treat them before they get to the more advanced stage of Alzheimer's - then we think we can have a dramatic impact on the quantity and quality of life," Vaughan said.