Contributing Writer

Orexigen Therapeutics Inc. pulled in a $30 million Series C financing to continue clinical development of obesity drugs Contrave and Excalia.

Less than two months ago, the San Diego-based company announced positive top-line Phase III data with Contrave, and just last month encouraging Phase IIa data with Excalia were presented at the North American Association for the Study of Obesity annual meeting.

"Contrave looks really good, and Excalia looks even better," said Kurt von Emster, general partner with MPM BioEquities, a new investor in the round. Von Emster added that his firm looked at "four or five" investments in the obesity space, but Orexigen was the only one that "carried water."

According to the Centers for Disease Control and Prevention in Atlanta, 30 percent of Americans are obese, putting them at an increased risk of heart attack, stroke, diabetes, anxiety and depression, among other complications. Within the next five years, the number of obese Americans is expected to top 82 million, creating a significant market that is driving considerable biotech and pharma interest.

In the last few months alone, Arena Pharmaceuticals Inc. started a Phase III trial with lorcaserin (formerly ADP356), Vivus Inc. presented positive Phase II data with Qnexa, and Manhattan Pharmaceuticals Inc. started a Phase II trial with its oral oleoyl-estrone (OE) obesity drug. Additionally, Amylin Pharmaceuticals Inc. presented preclinical data revealing an additive and synergistic weight loss effect when amylin is used in combination with other neurohormones and kicked off four clinical trials to evaluate the amylin analogue pramlintide in combination with leptin, PYY 3-36, the combination of leptin and PYY 3-36, and approved oral anti-obesity drugs.

The concept that a combination of multiple drugs might result in a synergistic effect is the backbone of Orexigen's obesity programs, as well. The company uses proprietary screening techniques to analyze the activity of various combinations of generic drugs within the hypothalamus, particularly at the POMC and AgRP/NPY neurons involved in regulating appetite and energy expenditure. The most synergistic pairs of drugs are moved into the clinic.

Orexigen also uses drug delivery expertise to reformulate the generic drugs and increase tolerability, which von Emster said provides the "value-added" piece of the equation. The reformulated pair of drugs "looks and feels like a new compound rather than just a combination of generics," he said.

Contrave, a combination of bupropion and naltrexone, is designed to induce sustained weight loss. Results from the first 24 weeks of a Phase II/III trial in 250 patients demonstrated that patients receiving the highest dose of naltrexone, which was still lower than the standard commercially available dose, lost an average of 7.52 percent weight from baseline as compared to 1.03 percent in the placebo group.

Patients receiving the lowest dose of naltrexone experienced significant weight loss with improved tolerability, and no serious adverse events attributed to Contrave were reported at any dose. A 24-week open-label portion of the trial is ongoing.

Excalia, a combination of bupropion SR and zonisamide, is designed for more rapid weight loss. In a Phase IIa trial, patients treated with Excalia lost on average 9.2 percent of their weight from baseline, compared to 0.4 percent weight loss in the placebo group.

The Excalia combination also outperformed either of the incorporated drugs alone. Approximately one-third of patients in the study discontinued treatment due to a side effect associated with zonisamide, and Orexigen is conducting a Phase IIb trial to optimize dosing of the two ingredients.

The Series C financing followed a $35 million Series B completed in April 2005 and an $11 million Series A closed in January 2004. All of Orexigen's existing investors participated in the current round, including Domain Associates, Kleiner Perkins Caufield and Byers (KPCB), Sofinnova Ventures, Bank of America Ventures, Montreux Equity Partners, Morgenthaler Ventures and NIF Ventures Co. Ltd.

MPM made the investment from its BioEquities group, a hedge fund that focuses on publicly traded or mezzanine round investments, rather than through its BioVentures family of venture capital funds. The other new investor in the Series C round, Wasatch Advisors, also invests predominantly in public companies.

Orexigen declined comment.

In other financing news:

• Anesiva Inc., of South San Francisco, will sell 7 million shares at $6.40 per share in a registered direct offering, raising about $45 million. Lazard Capital Markets LLC acted as the lead placement agent, and Needham & Company LLC and Rodman & Renshaw LLC acted as co-placement agents for the offering, which is expected to close Nov. 28. Proceeds will be used to advance Zingo, a local analgesia to reduce pain associated with venipunctures or intravenous line placements, as well as other pain products. Anesiva expects to file a common technical document/new drug application for Zingo this month.

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