Through a $45 million Series A financing, Alinea Pharmaceuticals Inc. plans to leverage assets licensed from the Institute for Diabetes Discovery to develop therapies for diabetes and metabolic disease.

Formed in August, Cambridge, Mass.-based Alinea will focus on three programs, including a lead Phase II candidate, lidorestat, for the prevention of the complications of diabetes.

"One of the objectives of the current round of capital is to run an additional Phase II trial of that compound to sort of position it for Phase III registration trials," said Robert Mashal, Alinea's newly appointed president and CEO.

While Alinea currently has two employees, it is not a typical start-up operation because it has exclusive rights to everything being done at the Branford, Conn.-based IDD laboratories, including access to capabilities in the areas of pharmacology, toxicology and pharmacokinetics, and it does not need to rely on in-licensing to build its pipeline. As a research and development organization founded in 1995, IDD is focused exclusively on metabolic diseases.

The parties will work together to bring compounds to the development candidate stage, with Alinea taking on the responsibility of investigational new drug-enabling studies, clinical development and commercialization of any resulting compounds. The discovery collaboration will be governed by a joint steering committee.

In addition to lidorestat, Alinea holds rights from IDD to several preclinical programs, the most advanced of which targets protein tyrosine phosphatase 1b. A lead compound could enter the clinic within 14 to 17 months, if everything continues to go well in preclinical testing. So far, orally dosed compounds that knock out the gene have shown a response in animals.

"They become more insulin sensitive, their glucose drops, their lipid profiles improve, and they see resistance to weight gain when fed a high-fat diet," Mashal said.

While it works to start a Phase II trial of lidorestat and move a PTP-1b inhibitor into the clinic, a third objective for Alinea is to take another program, which is focused on a target that improves the lipid profiles seen in diabetes and metabolic syndrome, to pre-IND-enabling studies.

But the company's main focus for now is starting the second Phase II trial for lidorestat, which is expected to begin early in 2006 and could last between six and 12 months. Alinea plans to move into Phase III studies sometime in 2007.

Lidorestat is an aldose reductase inhibitor. The enzyme normally is present in the eye and other parts of the body, and helps to change glucose into sorbitol. When there is too much sorbitol trapped in the eye and nerve cells, it can damage them and lead to retinopathy and neuropathy.

While a large number of such inhibitors have gone into clinical trials, only one product is on the market, in Japan, Mashal said.

"It's been a very, very difficult development path," he added. "Those molecules have had a tough time historically. Part of that is all of the best molecules have had some issues of toxicity and never really completed their Phase III programs."

He believes lidorestat is different because it has performed better than all the other compounds at every stage of development so far.

"That doesn't solve the complex development path issue, but we have a number of ideas about how to do it in a way that makes it more palatable, that doesn't involve very large, several-hundred-patient trials," Mashal said. "We will try to work with regulatory agencies to find a path forward that is less complex than the traditional paths."

Down the road, Alinea likely will partner its programs for commercialization because the indications it is targeting often require large sales forces.

"We will absolutely be looking to partner these programs," Mashal said. "The question is when. And the answer is - at the point we believe creates the most value for shareholders."

The $45 million financing should last Alinea about 24 to 30 months, enough time for it to reach the next milestones in its three programs. Led by Boston-based MPM Capital, the financing included participation from Boston-based Schroder Ventures (SV) Life Sciences, San Francisco-based Burrill & Co., and Cambridge, Mass.-based Flagship Ventures.

In connection with the round, Jeffrey Flier and Jay Skyler will become co-chairmen of Alinea's scientific advisory board. Flier is a professor of medicine at Harvard Medical School, the Harvard faculty dean for academic programs, and chief academic officer at the Beth Israel Deaconess Medical Center. Skyler is a professor at the University of Miami School of Medicine, and was formerly the president of the American Diabetes Association.

"We really got two of the best people I can think of to join our scientific advisory board," Mashal said. "And they did not take any convincing."

In addition to Mashal, Alinea's board consists of Nick Galakatos and Todd Foley, of MPM Capital; Michael Ross, of SV Life Sciences; John Kim, of Burrill & Co.; James Nolan and Michael Fare, of IDD; and Edward Scolnick, a former president of Merck Research Laboratories.