Four months ago Ortho-McNeil Pharmaceuticals Inc. said it was acquiring Peninsula Pharmaceuticals Inc. for $245 million. But the merger left behind Peninsula's lead antibiotic, which went on to become the lead product for spinout Cerexa.
Tuesday Cerexa announced that it raised $50 million in its initial financing, and Peninsula's former management team has taken over the Alameda, Calif., facilities to lead Cerexa and guide its inherited cephalosporin antibiotic, PPI-0903, through development. (See BioWorld Today, April 20, 2005.)
The $50 million will allow the company to take PPI-0903 into Phase II trials later this year and to its first milestone, said Cerexa's chief financial officer, Stan Abel, who added that the financing also will "allow us to think about expanding our portfolio."
Abel declined to comment on Peninsula choosing to merge with Ortho-McNeil, a subsidiary of New Brunswick, N.J.-based Johnson & Johnson, bringing with it a lead anti-infective compound called doripenem, and then to form a spinout. But the full focus for Cerexa is on PPI-0903, he said, and from the size of the company's first round, the product holds a lot of potential in the eyes of investors.
"Our existing Peninsula investors who are now Cerexa investors are very, very excited to have '0903," Abel told BioWorld Today. "It's a very unique and exciting antibiotic product, and for us to be able to have the opportunity to move that forward and move it to the clinic, it makes Cerexa a very unique investment opportunity."
If the next-generation product gains approval, it could tap into a huge market. Basel, Switzerland-based F. Hoffmann-La Roche Ltd., for instance, markets an injectable antibiotic called Rocephin (ceftriaxone) that had 2004 sales of more than CHF1 billion, or about US$786 million. Rocephin is indicated to reduce drug-resistant bacteria while treating various infections.
As a next-generation product, PPI-0903 has demonstrated in vitro potency against the most resistant strains of Gram-positive bacteria, including methicillin-resistant Staphylococcus aureus, penicillin-resistant Streptococcus pneumoniae and vancomycin-resistant Staphylococcus aureus bacteria. Those strains are responsible for a high rate of mortality in hospitals.
The product also has demonstrated in vitro activity against common strains of Gram-negative bacteria. It originally was developed by Takeda Chemical Industries Ltd., of Osaka, Japan, as a water-soluble prodrug form of T-91825, but Peninsula in-licensed the product in September 2003 and now is developing it for complicated skin and skin-structure infections, and community-acquired and hospital-acquired pneumonias.
A Phase I trial in healthy volunteers showed the compound was well tolerated. More details for an upcoming Phase II trial will be released later this year, Abel said.
Cerexa holds worldwide development and commercialization rights to the product outside of Japan.
Aside from studying PPI-0903, Cerexa is focused on acquiring or in-licensing hospital-based anti-infective therapies to treat patients with life-threatening infections. It has no other products in development.
"We are actively looking for other breakthrough hospital-based therapeutics," Abel said.
Cerexa's initial round was co-led by Seattle-based Frazier Healthcare Ventures and Menlo Park, Calif.-based New Leaf Venture Partners. It included significant participation from existing stockholders, including Domain Associates, of Princeton, N.J.; Canaan Partners, of Palo Alto, Calif.; OrbiMed Advisors, of New York; A.M. Pappas & Associates, of Research Triangle Park, N.C.; Montreux Equity Partners, of Menlo Park, Calif.; EGS Healthcare, of Rowayton, Conn.; and CDIB BioScience Ventures, of Taipei, Taiwan.
Joining Cerexa's board are Patrick Heron, of Frazier Healthcare Ventures, and Ron Hunt, of New Leaf Venture.
The company has 15 employees.