BrainCells Inc. is raising $17.7 million in its Series A round to identify compounds that can be used in its neurogenesis platform for neuropsychiatric disorders and other central nervous system diseases, starting with depression.

About $8 million of that has been invested to date, with the remaining $9.7 million expected upon the achievement of certain milestones, said Chairman and CEO Harry Hixson, who founded the San Diego-based company in December 2003, along with Fred Gage, a professor at the Salk Institutes' Laboratory of Genetics. Gage discovered that humans can generate new nerve cells throughout their lives, and that discovery serves as the basis of BrainCells' neurogenesis platform.

Hixson said Gage "has done pioneering work to develop assays to permit us to follow the differentiation of human neural stem cells into the various cells in the brain. We're primarily interested in the proliferation and differentiation of neurons," he added.

The company uses those assays to screen for small-molecule drugs that modulate the differentiation pathways in the brain.

With funds from the first financing round, BrainCells expects to take the developing assays in human cells and use them "to search for and identify compounds to in-license," Hixson told BioWorld Today, and then "enter a Phase IIa trial with a lead compound."

BrainCells' technology platform allows the company to operate using a three-pronged strategy. First, researchers look at existing CNS drugs that previously have been tested in human trials and screen those drugs for signs of neurogenic activity. The company's second effort focuses on optimizing new compounds that have not yet entered the clinic against known CNS targets.

Third, "we want to use our platform to discover novel targets and compounds," he said.

The company plans to begin by developing treatments for depression.

BrainCells added members to its management staff last year - naming Edward Hodgkin president and chief business officer and Carrolee Barlow vice president of biology research - just before moving into its laboratory in September. The company has 14 employees.

In December, the company merged with NeuroGenix, a spin-out of Columbia University that worked on elucidating the behavioral impact of modulating neurogenesis, with a focus on the relationship of the endogenous process to depression.

Within the next couple of years, Hixson said he expects to see a lead compound in Phase II trials and at least one compound in advanced preclinical or early clinical studies.

"I also expect several collaborations with major pharmaceutical partners," he said.

Technology Partners, of Palo Alto, Calif., along with seed investors Oxford Bioscience Partners, of Boston, and Bay City Capital, of San Francisco, led the Series A round. Other investors included A.M. Pappas & Associates, of Research Triangle Park, N.C., and NeuroVentures, of Charlottesville, Va.

Roger Quy, of Technology Partners, and Arthur Pappas, of A.M. Pappas & Associates, joined BrainCells' board.

Peptimmune Gets $20M in Series C

Cambridge, Mass.-based Peptimmune Inc. brought in $20.4 million in a second-round Series C financing to advance its clinical programs in autoimmune and metabolic disorders.

The company's lead product, GT 389-255, a lipase inhibitor and fat-binding hydrogel polymer conjugate, is in Phase I trials for obesity. A peptide immunotherapy, PI-0824, recently completed Phase I/II trials in pemphigus vulgaris, a rare autoimmune skin disease, and the company expects to enter the clinic with programs aimed at multiple sclerosis and rheumatoid arthritis during 2006.

The financing included participation by new and existing investors: New Enterprise Associates, of Menlo Park, Calif.; MPM Capital, of San Francisco; Prism Venture Partners, of Westwood, Mass.; Vanguard Ventures, of Palo Alto, Calif.; Hunt Ventures LP, of New York; Boston Medical Investors Inc., of Boston; Itochu Corp., of Tokyo; and Silicon Valley Bank Capital, of Santa Clara, Calif.

Rigel Prices 3.65 Million Share Offering

Rigel Pharmaceuticals Inc. priced its public offering of 3.65 million shares of common stock at a price of $20.75 per share, which would bring in gross proceeds of about $75.7 million.

Underwriters have the option to purchase up to an additional 547,500 shares to cover overallotments. Credit Suisse First Boston and New York-based Lehman Brothers Inc. are acting as joint bookrunners for offering, expected to close July 20.

The South San Francisco-based company said in its prospectus that proceeds would be used for research and development, as well as for general corporate purposes. Rigel focuses on developing small-molecule drugs in asthma/allergy, rheumatoid arthritis and cancer.

Shares of Rigel (NASDAQ:RIGL) lost 69 cents Friday to close at $20.87.

Keryx Raising $70M Publicly

With its lead compound, KRX-101, in pivotal trials, Keryx Biopharmaceuticals Inc. has priced its offering of 5 million shares of common stock at $14.05 per share to raise about $70.7 million.

If underwriters exercise the full overallotment option to purchase an additional 750,000 shares, gross proceeds could total $81.2 million. Funds will support the ongoing development of KRX-101 (sulodexide), an oral heparinoid compound for the treatment of diabetic nephropathy, as well as continued development of KRX-0401, an oral modulator of Akt in Phase II studies in multiple tumor types. Keryx also expects to use proceeds to establish a commercial and marketing infrastructure and for general corporate purposes.

Shares of Keryx (NASDAQ:KERX) gained $1.76 Friday to close at $15.81.

JP Morgan Securities Inc., of New York, is acting as the sole book-running manager, with Bear, Stearns & Co. Inc., also of New York, acting as co-lead manager. New York firms Jefferies & Co. Inc.; Oppenheimer & Co. Inc.; Brean Murray & Co. Inc.; and Punk, Ziegel & Co. LP are acting as co-managers for the offering, expected to close July 20.

Transgene Closes \34.9M Offering

Transgene SA, of Strasbourg, France, raised \34.9 million (US$42.1 million) through the sale of about 4.7 million units at \7.50 each.

European investment bank Bryan, Garnier & Co. Ltd. is acting as lead manager and Natexis Bleichroeder is acting as co-manager.

The company said net proceeds will be used to fund Phase II trials of its therapeutic vaccines to treat cancer and infectious diseases.

ReGen Raises $11.8M Privately

ReGen Biologics Inc., of Franklin Lakes, N.J., completed an $11.8 million private equity placement through the sale of about 13.9 million shares of unregistered common stock at 85 cents per share to institutional, venture and other investors.

Terms of the transaction include 25 percent warrant coverage, with a five-year term, and an exercise price of $1 per share.

Proceeds are expected to help fund the premarket approval process for its Collagen Meniscus Implant, to which the company recently regained the worldwide rights. ReGen focuses on developing orthopedic products involving tissue growth and repair using the body's own healing processes.

Xenomics Closes $2.77 Financing

New York-based Xenomics Inc. raised $2.8 million through a private placement to fund development of Transrenal-DNA, its medical diagnostic test for a range of diseases and genetic conditions, and to prepare for regulatory approval and commercialization.

The company sold about 277,100 shares of Series A convertible preferred stock, convertible to common stock at $2.15 per share. Investors also received 386,651 warrants to purchase common stock at $3.25 per share, exercisable within the next five years.

This financing follows a two-tranche round that closed in April after raising a total of $6 million for research and development efforts.

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