Six months after licensing a promising early stage product for irritable bowel syndrome, Tioga Pharmaceuticals Inc. raised $24 million in a Series A round to launch Phase II trials.

The product, asimadoline, is a small molecule licensed from its discoverer, Merck KGaA, of Darmstadt, Germany. Proceeds from the financing will fund a 600-patient Phase IIb study of asimadoline for irritable bowel syndrome (IBS) and a 130-patient Phase IIa trial for postoperative ileus.

"The money will take the company through to the completion" of those trials, said Stuart Collinson, Tioga's acting CEO.

By taking the numbers of patients with IBS and making "some assumptions about pricing in line with currently approved therapies," he told BioWorld Today, "you can quite quickly get to a market size of about $10 billion [worldwide] of diagnosed patients."

Tioga operates as a virtual company based in San Diego and was founded as a Merck spinout in July. Forward Ventures founded it, convincing Merck that asimadoline had a better chance of succeeding as the sole focus for Tioga than it would sitting on a shelf at a large pharmaceutical company. Merck retained an equity interest in Tioga and, if asimadoline is approved, it is entitled to royalties.

"They publicly realigned the company into a couple of therapeutic areas, cardiometabolic and cancer," said Collinson, who also is a partner at Forward Ventures. "This drug didn't fit into [Merck's] portfolio."

After putting up the initial money for Tioga last summer, San Diego-based Forward Ventures led the Series A round and was joined by investors New Leaf Venture Partners, of New York, and BB Biotech Ventures II, of Zurich, Switzerland.

Asimadoline has been tested in almost 800 people and has demonstrated a promising safety profile and encouraging clinical efficacy for the treatment of irritable bowel syndrome. It also appears to have potential for treating other gastrointestinal diseases, such as postoperative ileus, which is decreased or stopped bowel motility.

Tioga may decide to in-license other products "if we see something that is particularly attractive," Collinson said, but its main focus for now is on asimadoline, its only product. The Phase IIb trial in IBS will take about 18 months to complete and, at that point, Forward Ventures will make a decision for Tioga's future.

It might decide to sell the company, enter a partnership or raise more money and take asimadoline into Phase III trials on its own, Collinson said.

Irritable bowel syndrome, or IBS, affects about 10 million people in the U.S. and is a chronic condition marked by abdominal pain and disturbed bowel function. Health care costs associated with the disease exceed $25 billion annually.

Some companies have found IBS to be a difficult disease to treat. Pain Therapeutics Inc., of South San Francisco, terminated development last month of its IBS drug, PTI-901, which showed a statistically meaningful relief in the second month of treatment in a Phase III trial, but not in the third month of treatment, which was the primary endpoint. (See BioWorld Today, Dec. 13, 2005.)

There are two products approved for IBS: Zelnorm, by Basel, Switzerland-based Novartis AG; and Lotronex, by London-based GlaxoSmithKline plc. Both carry warnings of adverse events, such as ischemic colitis, constipation and diarrhea.

"We hope that our medicine is going to have a better profile," Collinson said, adding that asimadoline, a kappa-opioid agonist, has a different mechanism of action than the approved therapies.