By Brady Huggett
Gastrointestinal disease and disorder company Santarus Inc. completed a Series C $33.2 million private placement and said it now has the funds to see through the filing of a new drug application for its lead product.
"It was an extremely important round of financing so we can move our products to hit key milestones," said Gerald Proehl, president and chief operating officer of Santarus. "And it will allow us to file a [new drug application] before the money runs out."
The Series C round of financing included new investors Domain Associates LLC, of Princeton, N.J.; J.P. Morgan Partners, of New York; and Advent Venture Partners, of London. Previous investors participating in this round were St. Paul Venture Capital, of Minneapolis; Windamere Capital Ventures, of San Diego; Fog City Fund, of San Francisco; and Windamere LLC, of San Diego.
Santarus, of San Diego, should have one product in each of the three phases of trials by the end of 2001, Proehl said. The financing will be used in part to further the development and commercialization of its compounds and might be enough to get the company through the next 24 months, Proehl said, adding that some funding will go toward bumping up its 12-person staff.
"Our burn rate is about $600,000 a month," he said, adding the spending projections could change depending on how quickly products are moved forward.
Its product furthest along is a modified formulation of a currently marketed drug for the treatment of erosive esophagitis, gastroesophageal reflux disease and other related diseases. A Phase III trial of this unnamed compound should commence in the second half of this year, Proehl said.
"At this time, for competitive reasons, we are keeping the information about that product confidential," Proehl said. "Probably in the next month or two we should be able to get more information out."
Santarus has a reformulation of azathioprine licensed in from the Mayo Clinic for Crohn's disease that is in Phase II trials, and it has in-licensed a group of compounds for gastroesophageal reflux disease and erosive esophagitis.
"This third product is licensed from Tulane [University]," Proehl said. "The lead compound is a protective agent for the esophagus. Basically, it tightens the junctions in the esophageal epithelium." This tightening prevents the penetration of acid that causes heartburn into the deeper layers of the esophagus, Proehl added, saying Santarus should file an investigational new drug application by the second quarter of this year and begin Phase I studies by year's end.
Santarus' business strategy is to license in compounds that are in or near the development stage. For compounds with bigger markets it will seek a pharmaceutical company to partner with, but for its products with smaller target indications, such as Crohn's disease sufferers, it will put together a sales force of its own, Proehl said.
With the possibility of three trials being under way by the end of the year, the financing was necessary and timely. Santarus has a cash position of $31 million and Proehl said the next financial move has not been decided. But the stiff market is a factor.
"I think we are looking at both options - either a mezzanine-level financing or, if the market opens up early enough, we could potentially go public," Proehl said. n