Naurex bags an $80M round for PhIII study of an NMDA drug for depression

Whatever data Naurex collected from its recently completed Phase IIb study of an NMDA receptor drug for depression, it must have deeply impressed its investment syndicate. Today the company unveiled the news that it has rounded up an $80 million round designed to put the drug through a late-stage pivotal trial.

Evanston, IL-based Naurex released top-line data on GLYX-13 way back in May, limiting itself to the simple assertion that the study--which recruited more than 400 treatment-resistant patients--had produced clear evidence of a durable and safe antidepressant effect among a significant group of patients taking the drug. Hard numbers will be released next week at the Annual Meeting of the American College of Neuropsychopharmacology.

Calling the results a "breakthrough" for a new class of drugs that target neuroplasticity pathways, the biotech is also pushing its follow-up oral drug NRX-1074 into a mid-stage trial after bringing the total amount of money it has raised to $163 million.

Naurex CEO Norbert Riedel

New investors participating in the round include Cowen Investments, EcoR1 Capital, Goudy Park Capital, Portola Capital Partners and Sabby Capital. Existing investors also participated, including Adams Street Partners, Baxter Ventures, Druid BioVentures, Genesys Capital, H. Lundbeck A/S, Latterell Venture Partners, Northwestern University, PathoCapital, Savitr Capital and Takeda Ventures. And CEO Norbert Riedel says there's no mistaking signs of a bridge round that could lead to an IPO; the biotech wants to keep all avenues open to an offering, a buyout deal for the company or a future partnering pact.

"I could have left it with insiders," says Riedel, "but the goal was to be better prepared for an IPO" if that turns out to be the next logical step.

NMDA has been one of the top targets of depression research, in part because of the high profile earned by the party drug ketamine, an anesthetic and NMDA receptor therapy repeatedly linked with a promising effect on treatment-resistant patients--though the impact is often short-lived and the street drug is linked to psychotic episodes.

"What we have done is achieve the rapid onset of efficacy in hours," says the CEO, while establishing a durable affect among patients treated for 7 days or longer without experiencing the harsh side effects associated with similar drugs. And the work has implications for other CNS disorders such as bipolar disorder, schizophrenia and Alzheimer's disease.

Drug developers trying to pursue revised ketamine-based therapies that offer a durable effect but without the hallucinations and other side effects that make Special K a party drug--a list that includes AstraZeneca's ($AZN) failed effort--have run into a series of setbacks. Johnson & Johnson ($JNJ) has pushed a nasal formulation of the drug, esketamine, into Phase II and dubbed it one of their top experimental therapies. Cerecor's lead program, CERC-301, also aims to test the theory that blocking the NMDA pathway can swiftly and dramatically lift symptoms of major depression, even in patients who have been treatment-resistant for years.

Naurex's platform was built on the work of company founder and CSO Joseph Moskal and colleagues at the Falk Center for Molecular Therapeutics at Northwestern University. And Riedel believes that a partial agonist like GLYX-13 succeeded where others failed is because rivals often hit the NMDA target too hard.

Progress in depression as well as the whole CNS field has been rare in recent years. High placebo effects, uncertain mechanisms of action and repeat clinical failures has pushed many of the biggest players in the field to either get out entirely or cut back sharply. At the same time, though, large groups of treatment-resistant patients suffering from depression represent a major market opportunity.