Formed to develop products for central nervous system disorders and pain, new company Zogenix Inc. raised $60 million in a Series A round, which covered the costs to acquire the Intraject delivery technology from Aradigm Corp. and will support clinical development of the first product, Intraject sumatriptan, for migraine.

The Intraject technology, which involves the use of a needle-free, disposable, subcutaneous delivery system, has a "long history of development," said Roger Hawley, founder and CEO of Zogenix, who left an executive position with Brisbane, Calif.-based InterMune Inc. in January to start a firm with a CNS, neurology and pain focus.

He founded the company with Chairman Cam Garner, who previously formed San Diego-based Xcel Pharmaceuticals Inc. (Later sold to Valeant Pharmaceuticals Inc.)

Before Zogenix's interest, Intraject's development began with Weston Medical Group plc, of Cambridgeshire, UK, which filed for bankruptcy in 2003 after hitting a couple of technical snags with the technology. Hayward, Calif.-based Aradigm then stepped in, paying $2 million in cash to gain the intellectual property and other assets surrounding Intraject.

"Aradigm's challenge was to fix the technical shortcomings and to build a manufacturing infrastructure that could actually make the product at scale, and they've done that," Hawley told BioWorld Today. "The technology has been dramatically improved over the last couple of years."

Since Zogenix's focus is in the CNS space, the company originally considered licensing only the Intraject sumatriptan product. But when Aradigm decided to sell the Intraject technology and related assets in order to concentrate resources on its pulmonary delivery platform, the opportunity was too good for Zogenix to pass up.

"Delivering a needle-free device has been a long time coming," Hawley said, and the deal with Aradigm offered the chance "for us, as a start-up company, to have something that's this far along in development and has the potential, not just for sumatriptan, but for other products as well."

Under the agreement, Zogenix gained global rights to the technology in exchange for a $4 million up-front fee to Aradigm, and agreed to pay a potential milestone payment and royalties on the migraine product, plus royalties on other products based on Intraject. Those funds will go toward Aradigm's AERx pulmonary platform, which includes internal and partnered programs in asthma, cystic fibrosis, pulmonary hypertension, pulmonary anthrax infections and smoking cessation.

Aradigm, which reported a net loss of $12.4 million, or 85 cents per share, for the second quarter, had $8.9 million as of June 30, though that does not include a recent payment of $27.5 million from Bagsvaerd, Denmark-based Novo Nordisk A/S stemming from a partnership involving the AERx insulin diabetes management system.

Shares of Aradigm (NASDAQ:ARDM) closed at $1.79 Monday, down 2 cents.

Meanwhile, Zogenix will "develop and commercialize the technology in the CNS, neurology and pain areas," Hawley said, and will seek "to license the technology to other companies that might be interested in the device in areas outside our focus."

The Intraject device offers the ease of self-administration, and the fact that it's disposable after a single use and comes pre-filled it provides increased safety and prevents dosing errors.

Zogenix expects to start clinical development "just as soon as we can," Hawley said, adding that the company likely will have to conduct only one trial to test bioequivalence, while relying on efficacy data from London-based GlaxoSmithKline plc, which markets sumatriptan under the brand Imitrex.

"So the regulatory path should be fairly quick," he added, though he declined to provide a development timeline prior to meeting with the FDA.

Pending approval, Zogenix expects to create a U.S.-based commercial team with a small sales force with managed care capabilities. Hawley said the firm also anticipates considering a co-promotion arrangement in the U.S. for access to a larger primary care sales team.

But Zogenix is "not going to limit ourselves exclusively to development Intraject products," he said, "if we find some other products that are available for us to complete the development and commercialize in the U.S."

The company of 10 employees has administrative offices in San Diego and operations in Hayward, Calif., though it's looking to consolidate activities and establish headquarters in the East Bay area of San Francisco.

Joining Hawley and Garner is the rest of the founding management team: Stephen Farr, president and chief operating officer; Jonathan Rigby, vice president of business development; Bret Megargel, vice president of financing and corporate development; and John Turanin, vice president of operations.

The $60 million Series A round should sustain the company through 2008, Hawley said, though that could change depending on potential licensing and partnership activities over the next couple of years.

That round was co-led by Cambridge, Mass.-based Clarus Ventures and Princeton, N.J.-based Domain Associates LLC, and included investments by Foster City, Calif.-based BA Venture Partners; Stamford, Conn.-based Thomas, McNerney & Partners; and Palo Alto, Calif.-based Life Science Angels Inc.

With the financing, Zogenix appointed several members to its board, including Kurt Wheeler, of Clarus; James Blair, of Domain; Louis Bock, of BA Venture Partners; and Alex Zisson, of Thomas, McNerney & Partners.

In other financings news:

• Magen BioSciences Inc., of Cambridge, Mass., secured $15.4 million in new Series A funding, led by Highland Capital Partners and included investments from IDG Ventures, QVT Financial LP, Alexandria Real Estate, ARCH Venture Partners, Lux Capital, TVM Capital and Venrock Associates. Proceeds will be used to develop and expand the company's therapeutic programs and operations. Magen, founded in March 2006, focuses on developing products for the dermatology market. In conjunction with the financing, Highland's Robert Higgins will join Magen's board.