National Editor

Building itself around a Phase II drug in-licensed from Wyeth, Cardiokine Inc. raised $37 million in a private equity financing that will help the company take aim at heart failure and cardiovascular indications.

"This is the first and only round," said James Mervis, CEO of Philadelphia-based Cardiokine. "We've bootstrapped until now, primarily fund-raising and negotiating licenses in tandem for about a year."

The company was founded by Arthur Feldman, an expert in heart failure and current chairman of medicine at Thomas Jefferson Medical College in Philadelphia, joined by Mervis along with Paul-Andre de Lame, former senior director of clinical affairs at Parke-Davis, and Michael Juliano, a co-founder of Denver-based Myogen Inc.

"[Feldman] was thinking about starting a company in this area at the same time I was," Mervis said, and Cardiokine combines Feldman's knowledge with the business experience of Mervis, who also co-founded Barrier Therapeutics Inc., of Princeton, N.J.

Mervis described Cardiokine's staff as "very small. I'm not going to put a number on it, because it's a moving target. There may be more people by the end of the day," he said.

The drug licensed from Madison, N.J.-based Wyeth is lixivaptan (VPA-985), a non-peptide, orally active vasopressin antagonist for hyponatremia (sodium deficiency) associated with heart failure as well as liver cirrhosis and nephrotic syndrome. It works by blocking vasopressin-dependent water resorption, increasing water excretion with low electrolyte loss, and is selective toward the V2 receptors. Put more simply, "it's a sodium-sparing diuretic," Mervis said.

"We're evaluating all the data we've received from Wyeth," he said. "They conducted numerous Phase II trials," and Cardiokine is deciding whether to conduct more or advance to Phase III.

"We are looking for additional drugs to in-license, to take advantage of [Feldman's] research," he added. "We were fortunate enough to find lixivaptan and convince Wyeth that we are the right team to develop it, but whether that will remain our main approach to getting drug candidates is yet to be determined," Mervis told BioWorld Today, noting that internal research to originate compounds also is an option.

Meanwhile, talks are under way with other would-be grantors of licenses. The number sought is not decided, Mervis said.

"We're like any other company, [in that] we're flexible and we can expand as necessary, but I don't think an organization at this stage of its growth can handle more than three," he said.

Perseus-Soros Biopharmaceutical Fund LP, of New York, and HealthCare Ventures VII LP, of Princeton, N.J, led the financing. Also taking part were Care Capital Investments II LP, also of Princeton; CIBC WMC Inc., of New York; and Burrill Life Sciences Capital Fund LP, of San Francisco.

Two people from Perseus-Soros, one person from HealthCare, and one from Care Capital are taking seats with Feldman and Mervis on Cardiokine's board.

Mervis' previous effort, Barrier Therapeutics, in February filed an initial public offering through which it hopes to raise $86.25 million. In May 2002, Barrier took off with a $46 million financing through which it licensed a portfolio of products from affiliates of Johnson & Johnson, of New Brunswick, N.J. In February of this year, the company started enrollment in a Phase III trial with Hyphanox (itraconazole) for vaginal candidiasis, pitting the efficacy of Hyphanox against New York-based Pfizer Inc.'s antifungal Diflucan (fluconazole).

The comparison between Barrier and Cardiokine, in terms of their beginnings, is noteworthy, Mervis said.

"Both opportunities were catalyzed by the fact that big pharmaceutical companies are shelving excellent prospects because they're too small for very large organizations to motivate their staffs with," he said. "Sometimes [those prospects] are in an indication that a company has stepped out of generally to focus in another."

Though potentially lucrative, the cardiovascular area is "not the largest indication on the block," he pointed out.