By Randall Osborne
Moving toward Phase II studies of a treatment for migraines, CoCensys Inc. eased any worry about financial headaches with a private placement of $8 million in convertible preferred stock, in a deal that could include $2 million more later.
"It's a provision that, if we meet certain conditions, [the added money] automatically transfers," said Richard Nichol, president and CEO of Irvine, Calif.-based CoCensys.
The company's migraine drug, ganaxolone, is a synthetic version of naturally occurring neuroactive steroids known as epalons, which suppress inflammation in the lining of the brain.
"[Ganaxolone] was originally taken into the clinic in Europe, with very severe epileptic kids, in a liquid formulation," Nichol told BioWorld Today. An epilepsy trial in adults was done "with very good effects," he added, but the company is more focused on the drug's application to migraine.
A Phase II trial with the liquid ganaxolone in 252 adult women ended last October, with favorable results.
"We knew the liquid would not be the most appropriate formulation commercially, but we wanted an answer," Nichol said. Using the money from the placement, another Phase II trial — this one with a tablet formulation — will begin the last week of June and finish in early November.
"Our strategy is then to have a three- to four-week review period, and have some disclosures by mid-December," Nichol said.
Also in development is a sodium channel blocker for severe neuropathic pain.
"It's in the latter stages of preclinical profiling," Nichol said. "We're on track to file an investigational new drug application in the latter part of the fourth quarter."
The company may test ganaxolone again with epilepsy, but not soon, he added.
"While we did a nice financing, and we have resources for the company to stay viable for over a year, we have to be extremely careful with resources," Nichol said.
As of March 31, the company had $13.9 million in cash, with a net loss of $3.1 million for the period.
In the financing, the preferred stock carries a 7.5 percent per annum dividend until converted, though the dividend rate may drop if the company's common stock price increases to a certain level. Preferred stock shares are convertible no later than three years from issuance, and the conversion price is based partly on the common stock price at conversion, subject to a maximum of $3.93 per share.
CoCensys' stock (NASDAQ:COCN) closed Wednesday at $2.75, down $0.25. *