San Diego’s Somaxon Pharmaceuticals (Nasdaq: SOMX) says it has submitted a revised new drug application for its insomnia drug doxepin (Silenor), and the biotech raised about $6 million in a private stock placement to see it through the NDA process.

As I noted in February, the U.S. Food and Drug Administration turned down Somaxon’s initial application, asking the drug developer to address concerns about prolonging the heart’s QT interval—a key measure of the heart’s electrical rhythm. Somaxon said it intended to regroup and try again, and it met with FDA officials in April to gain a better understanding of the regulators’ concerns.

The company also spent some time on a financial makeover. Somaxon said in May it had erased $15 million in debt, although the company also had depleted its available cash from $14.3 million at the end of December to $3.8 million at the end of March. The company also reduced its operating costs. Somaxon reported a loss of $4.5 million for the first quarter that ended March 31, down from a loss of $7.1 million during the same quarter in 2008. As a development stage pharma, the company had no revenues.

The company also said in May it’s continuing to look for a Big Pharma partner to help further development of doxepin, and it signaled its intent to raise cash for another go at FDA approval. Several of the company’s existing investors are participating in the financing, including MPM Capital, Montreux Equity Partners, Scale Venture Partners, Prospect Venture Partners and Domain Associates, as well as Tavistock Life Sciences and other new investors.

In a statement today, Somaxon CEO Richard W. Pasco says, “We expect that the cash raised in this financing, together with our existing resources, will allow us to operate our business through the FDA review cycle of the NDA resubmission and extend our cash runway through the second quarter of 2010.”

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Arena Pharmaceuticals is scrapping development of its experimental insomnia medicine, after it failed to reach its primary and secondary goals in a clinical trial of more than 700 patients. The San Diego-based biotech company (NASDAQ: ARNA) didn’t have much more to say than that, other than it’s in a hurry to turn the page and look forward to results next year for another treatment in the works for obesity.

Arena has been eagerly anticipating a positive finding for this drug, APD125, so it could become a viable second candidate behind its lead horse, lorcaserin for obesity. The insomnia medicine was not a generalized sedative like Sanofi-Aventis’ zolpidem (Ambien) so it was hoped the newer medicine could help people stay asleep at night, without having the morning grogginess of other meds.

Now investors in Arena will turn their attention again to an even bigger event for the company. It expects to unveil a two-year analysis in March from a clinical trial of lorcaserin. The trial, called Bloom, enrolled almost 3,200 patients seeking to lose weight. The medicine is meant to stimulate a protein in the brain that makes people feel full, without triggering a similar protein that caused Wyeth’s fen-phen drug combination to damage patients’ heart valves before it was pulled off the market in 1997. If Arena can show its drug passes the safety test, and helps people shed pounds, then it expects to file an application with the FDA for permission to sell the drug by the end of 2009.

The company is planning to discuss the next steps for lorcaserin, and other drugs in development, at its R&D day with analysts on Dec. 15.

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Arena Pharmaceuticals is known on Wall Street for one thing—obesity. The San Diego biotech company has a modified form of the fen-phen combination drug that’s supposed to help people lose weight without causing the heart damage that killed that Wyeth product a decade ago.

But Arena (NASDAQ: ARNA) has a sleeper in pipeline— a novel drug for insomnia. The company is planning to unveil results within a couple weeks from a clinical trial of 700 patients that will give it a good idea of the drug’s prospects. I got the rundown on it from CEO Jack Lief on a visit to Arena’s headquarters last week.

Sleep, of course, is one of those essential biological functions that’s a casualty of this frenetic digital age. Something like 70 million Americans have some form of insomnia, and it’s a chronic problem for one in 10 people in the U.S., according to the National Institutes of Health. The nation spends an estimated $14 billion a year on direct costs of this disorder, including drugs, healthcare services, and hospital and nursing home care, according to the National Sleep Foundation. Existing drugs generated sales of more than $3.5 billion in 2006, Arena says. The best known drugs for this disorder are sedatives like Sanofi-Aventis’ zolpidem (Ambien), which tend to leave people groggy in the morning, and occasionally cause creepy side effects like sleepwalking or sleepeating. Anything better could be a very big seller.

Arena’s drug, APD-125, is designed to block a specific receptor on cells in the brain, called 5-HT2a, that’s blocked by some antipsychotic drugs, but not specifically by other insomnia meds. The Arena drug is not made to be a generalized sedative, so it ought to help prevent people from waking up multiple times in the night, without the groggy “hangover” effect in the morning, Lief says. The treatment should help people sleep more deeply, and get more high-quality rest.

“A lot of people have tried Ambien and don’t take it anymore because of the next-day hangover effect,” Lief says. “People want to feel more rested in the morning.”

Arena isn’t the only company that has been working on this idea. Sanofi-Aventis has two other drugs in development that block the same receptor, called eplivanserin and volinanserin, Lief says. Those drugs are less selective for the receptor that Arena blocks, and were originally designed for other uses, but they are closer to reaching the marketplace than Arena, he says. …Next Page »

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