Intranasal's Series A Brings In $39M For Pain, CNS Products

Intranasal Therapeutics Inc. raised $39.1 million in a Series A round to support ongoing development of its nasal delivery platform, including the anticipated launch of its first product, a hydromorphone nasal spray for acute pain, for military use.

It's the largest venture capital round for ITI, which was founded in 1998 and took "a different path than most early stage companies," said Edwin Cohen, founder and chairman of ITI.

Since inception, the company has received a $1 million equity investment and a $2.5 million loan, both from the Commonwealth of Kentucky, followed by nearly $1 million from local investors. Beyond that, the company primarily has been funded by Cohen, who has invested close to $18 million over the years.

Cohen previously founded generic drug company Barr Laboratories Inc., where he spent more than 25 years as CEO before stepping down in the 1990s to look for other opportunities.

"With the outbreak of AIDS and the clear recognition that AIDS was spread not only by sexual contact, but also by dirty needles," he said, "it seemed to me that if we could take the needle out of the drug paradigm, we would save a lot of people a lot of problems."

Cohen discovered that the University of Kentucky had been working in the nasal delivery field and held several patents. In the late 1990s, he started some proof-of-concept studies, and with promising results in hand, formed ITI.

So far, the "reception from the medical profession has been very, very heartening," he told BioWorld Today. "Even the federal government recognizes the issues here."

In November 2000, Congress signed into law the Needlestick Safety and Prevention Act, which included a requirement by OSHA for employers to identify and use safer medical devices.

"It basically says that if there's an alternative to a hypodermic syringe, you should be using it," Cohen said.

The advantage of nasal delivery is that "you can get [a drug] directly into the blood stream without being invasive," he added. "The nose is designed perfectly to accept medication, and it's dense with blood vessels, so you get very rapid absorption."

ITI's first products involve working with older, off-patent drugs to achieve bioequivalency to administration via a hypodermic syringe. Its lead program, a hydromorphone nasal spray, is in late-stage development in acute pain.

The company recently completed an end-of-Phase-II meeting with the FDA, and while at that meeting, learning of the military's interest in the product for use on the battlefield and for trauma injuries.

"We're hoping to get expedited approval" with limited labeling for military use, Cohen said, "and then we'll do other types of clinical studies for commercial use."

Earlier in the clinical pipeline, ITI has nasal formulation of lorazepam for seizures and midazolam, which is similar to lorazepam but has a faster onset of action and a shorter duration.

"There's some interest from the military on that [midazolam] product, as well," Cohen said, adding that its quick onset could make it ideal for nerve gas exposure.

ITI also is in "active talks" with potential collaborators, Cohen said, and the company plans to seek partners for developing intranasal formulations of drugs in development.

The Series A funding will be used to advance the pipeline and should sustain ITI's operations "until we're cash-flow positive," Cohen said, which he estimates will take about 18 months to 24 months, if all goes as planned.

The financing round was led by Boston-based SV Life Sciences and included investments from Burrill & Co., of San Francisco; Tullis-Dickerson, of Greenwich, Conn.; Fidelity Biosciences, of Cambridge, Mass.; ApjohnVentures, of Kalamazoo, Mich.; Fort Washington Capital, of Cincinnati; Commonwealth See Capital, of Lexington, Ky.; and Kentucky Co-Investment Partners LP.

Michael Ross, of SV Life Sciences, along with Burrill's John Kim, Fidelity's Robert Weisskoff and James Tullis, of Tullis-Dickerson, were named to ITI's board. Bruce Peacock, a Philadelphia-based biotech executive, also joined the board.

ITI, which has 23 employees, houses its administrative headquarters in Montvale, N.J., and has a manufacturing, research and development facility on the University of Kentucky's Coldstream Research Campus in Lexington.

In other financings news:

• Isotechnika Inc., of Edmonton, Alberta, agreed to cancel the planned drawdown under its equity facility with Azimuth Opportunity Ltd. announced July 14. The decision was due to the company's share price during the 20-day drawdown period falling below the floor price previously established. Isotechnika entered the two-year financing agreement with Azimuth in May to bring in as much as $40 million through drawdown arrangements at the company's discretion. Funds are expected to support ongoing development of ISA247 in psoriasis. Shares of Isotechnika (TSX:ISA) closed at C$1.30 (US$1.16) Tuesday, up C2 cents.

• LipoScience Inc., of Raleigh, N.C., closed a $13 million Series F financing and plans to invest the funds in the deployment of its in vitro diagnostic system and its MNR LipoProfile test that measures the number of LDL particles to determine heart disease risk. Investors included Camden Partners LLC, GE Capital Equity Investments, Invesco Private Capital, Pappas Ventures, Sightline Partners, Three Arch Partners and Varian Inc. Richard Johnston, of Camden Partners, joined the company's board.

• Tm Bioscience Corp., of Toronto, completed a private placement financing of unsecured subordinated debt together with common share purchase warrants for total proceeds of C$6.24 million (US$5.6 million). Proceeds will be used to advance the company's pipeline of genetic tests and for general working capital purposes. Tm's shares (TSX:TMC) closed at C67 cents Tuesday, down C13 cents.