Naurex announces completion of $18 million Series A financing

May 11 2011

Naurex Inc., a clinical-stage company developing innovative treatments to address unmet needs in psychiatry and neurology, today announced the completion of an $18 million Series A financing led by Adams Street Partners and Latterell Venture Partners.  Druid BioVentures, Genesys Capital, PathoCapital, Lundbeck, Takeda Ventures, Inc. and Shire also participated in the round.  Naurex will use the proceeds from the Series A financing primarily for the Phase II trial of its lead compound, GLYX-13, a glycine-site functional partial agonist (GFPA) selective modulator of the NMDA receptor (NMDAR), and also to advance its second-generation GFPA program.  

"We view the distinguished group of investors joining our Series A round as an encouraging indicator of the significant clinical and commercial potential of our novel NMDAR modulators," noted Derek A. Small, chief executive officer of Naurex.  "We are delighted that the syndicate includes both experienced healthcare venture capital firms as well as three major pharmaceutical companies."

Naurex also announced that Wilbur (Bill) Gantz of PathoCapital has been named chairman of Naurex's board of directors, a newly created position.  Terry Gould of Adams Street Partners and Kenneth Widder, MD, of Latterell Ventures are also joining as directors.  Current board member David U'Prichard, PhD, of Druid BioVentures will continue as a director of Naurex, as will independent director Edward Chandler.

Mr. Small added, "We are very fortunate to be able to welcome these talented individuals to our board, including Bill Gantz as chairman.  Bill has an outstanding record of achievement in our industry that includes heading a leading global healthcare company and serving as chief executive of a number of entrepreneurial life sciences enterprises that he guided to successful exits.  We expect his experience and wisdom will be invaluable going forward."

"Diseases of the CNS affect millions of patients, too many of whom are poorly served by current therapies," said Mr. Gantz.  "Naurex's GFPAs show the potential to address some of the most serious deficiencies of current antidepressant agents, and the company has assembled a first-rate team to move them through development.  I look forward to working with Naurex as we assess whether our GFPAs can deliver clinically on the promise they have shown to date."

Known NMDAR-modulating agents such as ketamine have been shown in several human clinical trials to act very rapidly to alleviate the symptoms of depression and bipolar disorder, but their clinical utility has been hampered by their potential for abuse and behavioral impairment, including schizophrenia-like effects at doses near the therapeutic dose.  GLYX-13 is Naurex's lead GFPA selective modulator of the NMDAR.  The novel GFPA class of compounds has demonstrated the potential to achieve the well-documented efficacy of classic NMDAR-modulating drugs, while avoiding their serious side effects.

In preclinical studies, GLYX-13 has demonstrated the robust antidepressant-like activity of ketamine, including its rapid onset and long duration of effect, with no signs of side effects.  It also achieved the widest therapeutic ratio between efficacy and side effects (>500:1) of any known NMDAR modulator.  

In a Phase I trial, GLYX-13 was well tolerated, with adverse events for the groups receiving GLYX-13 and placebo all rated as mild. There were no signs of the schizophrenia-like side effects associated with other drugs that modulate the NMDAR.  Naurex expects shortly to initiate patient enrollment in a Phase II trial of GLYX-13 in patients who are not achieving an adequate response to their current antidepressant agents.

"We are pleased to co-lead this Series A financing for Naurex as the company prepares to launch a Phase II trial testing GLYX-13 in treatment-resistant depression," said Mr. Gould.  "There is substantial unmet need for faster, more effective and safe antidepressants, and we believe that Naurex has assembled the right product candidates, development strategy and team to tackle this critical area."

In addition to GLYX-13, Naurex is developing the NRX-1050 series of GFPAs, including numerous second-generation, orally available molecules with structures and mechanisms of action similar to GLYX-13.  The efficacy potential of GFPAs has been demonstrated in animal models in a number of CNS disorders, including major depressive disorder, neuropathic pain, schizophrenia, anxiety, Alzheimer's disease and other cognition disorders.  

Dr. Widder commented, "We are impressed by the fact that Naurex has accomplished a great deal to date with limited capital resources, and we are delighted to co-lead this Series A round, which should enable the company to accelerate development of its GFPA compounds that have shown considerable promise preclinically in a variety of CNS disorders."

Naurex's new chairman Bill Gantz is president and chief executive officer of PathoCapital, a healthcare investment firm.  Previously, he was executive chairman of Ovation Pharmaceuticals, which was acquired by Lundbeck.  Earlier, Mr. Gantz was chairman and chief executive officer of PathoGenesis Corp., a publicly traded biopharmaceutical company that was acquired by Chiron.  His 25-year career at Baxter International included his serving as the company's president.  Mr. Gantz is a graduate of Princeton University and Harvard Business School.

Mr. Small added, "We want to take this opportunity to express our thanks to departing directors Bert Atwater Getz, Jr., Jan Edward Leestma, MD, and J. Stark Thompson, PhD.  They have provided invaluable guidance and support in helping us grow Naurex from day one, and we greatly appreciate their contributions that have helped us achieve our successes to date."