By Randall Osborne

West Coast Editor

Aiming to file at least one investigational new drug application annually for the next several years, Synaptic Pharmaceutical Corp. said it is raising up to $41 million in a two-stage financing that began Friday with a convertible preferred stock offering that gained $9.4 million for the company.

The second part of the financing, led by Warburg Pincus & Co. LLC in New York, subject to shareholder approval, is expected to raise $31.6 million, giving the firm 7.6 million new additional common share equivalents, at an average price of $5.42 each.

An IND for Synaptic¿s depression program is expected in the fourth quarter of this year.

Kathleen Mullinix, chairman, president and CEO of Paramus, N.J.-based Synaptic, said Warburg ¿likes to take significant positions, and be in the company-building business, and our company fits the profile¿ of those typically chosen.

As part of the financing agreement, Jonathan Leff, managing director of Warburg, and Stewart Hen, vice president, gain seats on Synaptic¿s board of directors.

Under the terms of the deal, Warburg bought $9.4 million worth of Series B preferred stock, convertible into 2.2 million shares, or about 19.9 percent of Synaptic¿s outstanding common shares, at a conversion price of about $4.34 per share.

The second part of the financing involves Warburg¿s purchase of as much as $1.6 million worth of Series B preferred stock and $30 million worth of Series C preferred stock, and a conversion price of about $5.97. Assuming the second part closes, the weighted average price will be $5.42.

Synaptic focuses on G protein-coupled receptors, and has collaborations with Grunenthal GmbH, of Aachen, Germany, for pain drugs, and with Kissei Pharmaceutical Co. Ltd., for functional genomics to find new targets for the Tokyo-based firm.

Forty percent of the top-selling drugs are based on GPCRs, Mullinix said.

¿The technology works extremely well, in terms of what you want to design out of them, not only what you want to design into them,¿ she told BioWorld Today. ¿What it takes is getting the perfect compound.¿

Mullinix said Synaptic has ¿exclusively focused on GPCRs since the company started, and we think they¿re the best targets to go after.¿ The company has ¿been involved in proving validity of a target, which is to say success in Phase II trials,¿ with Eli Lilly & Co., of Indianapolis, which is working on a migraine drug, and with Merck & Co., of Whitehouse Station, N.J., on a drug for benign prostatic hyperplasia.

Synaptic¿s stock (NASDAQ:SNAP) closed Friday at $6.23, up 13 cents.