In its first round of financing, Chelsea Therapeutics Inc. raised $14.5 million, including a $4.4 million overallotment option, to move its lead drug for rheumatoid arthritis into clinical trials.

"We're in good financial shape," said Simon Pedder, president and CEO of the Charlotte, N.C.-based company. He told BioWorld Today the funding would get Chelsea's lead product, CH-1504, into trials, as well as fund preclinical screening of additional compounds and provide money for licensing fees.

Paramount BioCapital Inc. in New York acted as placement agent.

Pedder said the company initially sought $10.5 million in the Series A financing.

"For our lead antifolate compound, we calculated we would need about $7.5 million to get into trials," he said. "But we actually ended up looking at an overage of almost $4.5 million."

Beyond the $14.5 million, Chelsea pulled in seed money - less than $2 million - from Paramount Capital when the company was created in 2003.

Originally founded as Aspen Therapeutics Inc. and located in New York, the name was changed to Chelsea after the company moved to Charlotte in July. Pedder, who was named CEO in May, said "obviously the name Aspen didn't make much sense in North Carolina," and chose the name Chelsea after his favorite soccer team in the UK.

Pedder brought in a five-person management team last year. Chelsea has a total of six employees, as well as contract workers, though Pedder said he hopes to see that number double within the next year.

The company's product development is based on antifolate compounds licensed in March from Gopal Nair of the University of South Alabama College of Medicine. Antifolates, which have been used for more than 30 years, are structurally related to folic acid and act as antagonists to the vitamin by inhibiting dihydrofolate reductase (DHFR), an enzyme that converts folic acid to active form.

"We have a number of antifolate compounds, including Chelsea's lead product, 1504, which are known to have indications for rheumatoid arthritis, arthritis and some oncology indications," Pedder said.

Methotrexate has been the antifolate prototype used to treat rheumatoid arthritis, psoriasis and certain cancers for several decades, but there are some toxicity issues, he said.

"The problem with methotrexate is tied to its metabolism," Pedder said, adding that the drug can show problems with tolerability in short-term use and can result in liver and kidney damage with long-term use.

Pedder said methotrexate also has indications as an anti-inflammatory drug, but is not used as such because of existing safety concerns.

"Dr. Nair studied and designed a class of molecules that could produce the same action [as methotrexate] but not undergo significant metabolism," he said, which creates "a much safer, more tolerable version of methotrexate, while enhancing the efficacy."

CH-1504 previously was tested in a six-month pilot study involving 20 patients suffering from rheumatoid arthritis.

"In comparison with methotrexate, CH-1504 was found to be more efficacious and also better tolerated," Pedder said.

Even though the pilot study was not designed in accordance with U.S. regulatory standards, the results were encouraging, Pedder said, adding, "It's unusual to have early clinical data like this."

During the last six months, Chelsea performed toxicological studies in animals, and the company plans to start Phase I trials in the UK in March. Pedder said the company also will file an investigational new drug application in the U.S.

Later this year, Chelsea plans to move into late-state Phase I and II trials in both the UK and the U.S.

While CH-1504 is the only product heading toward clinical testing, Chelsea is working on preclinical screening for other molecules that could be developed into drug candidates.

Pedder said Chelsea is in "late-stage negotiations" with three companies to in-license additional compounds, adding that funds will come from the recently completed financing round.

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