Loading up with enough cash to complete a pair of upcoming Phase II trials and operate for at least two years, Corus Pharma Inc. raised $40 million in a Series B preferred stock offering.
The first trial, of an inhaled reformulation of lidocaine for asthma licensed from Rochester, Minn.-based Mayo Clinic, will begin in the second quarter of this year, said Bruce Montgomery, CEO of Seattle-based Corus.
"[Scientists at Mayo] have Phase II data, and what we're doing is a Phase II study with a new delivery device," Montgomery said - one that privately held Corus hopes will avoid a side effect found by Mayo: transient pharyngeal numbing.
"They used a standard jet nebulizer, which creates a fairly broad range of particle size, with a lot of deposition in the back of the throat," he told BioWorld Today. Corus' nebulizer, licensed from Starnberg, Germany-based Pari GmbH, provides a finer, more uniform spray.
"It's about 40 percent more efficient and faster," Montgomery said.
The cystic fibrosis program uses the nebulizer with a reformulation of the antibiotic aztreonam, which is used in hospitals intravenously for patients with exacerbation of Pseudomonas aeruginosa, which causes CF lung infections. The Phase II trial with aztreonam is expected to start in the third quarter.
Corus' inhaled delivery "simplifies it and makes it an outpatient treatment," said Montgomery, founder of Corus, who also has worked for South San Francisco-based Genentech Inc. and is former vice president of research and development at PathoGenesis Corp., now part of Emeryville, Calif.-based Chiron Corp.
"The approach is similar to what we did with TOBI at Pathogenesis," Montgomery said. Seattle-based Pathogenesis developed TOBI as the only tobramycin solution for inhalation against Pseudomonas aeruginosa lung infections in CF.
"That's why Pathogenesis was bought by Chiron for $700 million," he said. (See BioWorld Today, Aug. 15, 2000.)
Montgomery said he doesn't believe Corus' inhaled CF product will compete with the one he helped develop at Pathogenesis.
"TOBI's given month-on, month-off," he said, in order to lower the risk of the drug developing resistance. As a result, many physicians aren't using it in mild to moderate CF patients, because they "don't want to use up their silver bullet."
Montgomery said a second antibiotic for CF "would probably do a big favor to Chiron," rather than harm sales.
"I heard the same thing [when we were developing TOBI] - that it was going to hose Pulmozyme," he added, referring to Genentech's dornase alfa, which is recombinant human DNase for CF.
"As soon as it got out there, TOBI made everybody live longer and Genentech's sales went up," Montgomery said. "It turned into a win-win."
A sleep apnea drug that Corus had in development was "put on the back burner" after Phase II results weren't up to snuff, Montgomery said. Spin-off companies are developing the asthma and CF compounds - a deliberate strategy that goes with using approved drugs in new formulations.
The latter approach ensures that "you already know the adverse effects of the drug," Montgomery said. "You're not worried about some sort of weird side effect that's going to affect [very few] patients."
Assigning specific programs to spin-off companies means "at the end of Phase II, if somebody wants to buy one, we can sell the whole program in a tax-advantaged way," he added. "It essentially means I really understand where my money's going."
Both Phase II trials are expected to finish by the end of this year. The Pari nebulizer will "probably not" be used by Corus with compounds further back in the pipeline.
"We may or may not," Montgomery said. "Each drug is different in terms of the mass of drug and solubility." But Corus is "fairly agnostic on delivery platforms, and we'll license whatever works for us. We're not wedded to one."
The company has a development deal with BatellePharma Inc., a Columbus, Ohio-based firm with formulation technology and an aerosol delivery method called Mystic.
"I'm told it's very difficult to raise money," Montgomery said. He made a joking reference to a local newspaper article that declared funding for biotechnology almost impossible to find, and likened it to the premature, incorrect Chicago Tribune headline on the 1948 presidential election, "Dewey Defeats Truman."
Leaders of Corus' latest financing round were JPMorgan Partners, of New York, Toronto-based RBC Capital Partners, and Novo Nordisk A/S, of Bagsvaerd, Denmark. Corus appointed to its board Ulrik Spork, senior partner at Novo, and Justin Stephenson, managing partner of life sciences at RBC, as part of the financing.
Existing investors who also took part include Burrill & Co., of San Francisco; OrbiMed Advisors, of New York; Cascade Investment, of Kirkland, Wash.; Washington Research Foundation, of Seattle; and Anthem Venture Partners, of Santa Monica, Calif. Also investing in the latest round were MDS Capital, of Toronto, and Integra Ventures, of Seattle.
Corus raised $18.5 million in its Series A financing round in the summer of 2001, about five months after the company's inception. (See BioWorld Today, June 7, 2001.)