Here are the week’s headlines in North Carolina biotech news:
—Scynexis (NASDAQ: SCYX) is raising $30 million through a secondary stock offering largely to finance clinical trials for its lead drug, an antifungal. The offering boosts the Durham, NC, company’s cash reserves. In a securities filing, the company said its cash and cash equivalents totaled $32.2 million as of the end of 2014.
The Scynexis drug, SCY-078, would treat Candida and Aspergillus fungal infections, including infections caused by drug-resistant strains of the fungi. Scynexis estimates the market opportunity to treat such infections is approximately $3.6 billion. The company aims to treat immune-compromised patients, such as transplant patients who are vulnerable to fungal infections. Scynexis plans to apply proceeds from the stock offering toward development of an intravenous formulation of the drug. Proceeds would also finance mid-stage clinical trials of a pill version of the Scynexis drug, as well as start a study that includes both the pill and intravenous versions. In March, the company enrolled the first patient in a Phase 2 clinical trial in Candida infection. Scynexis expects to start a Phase 1 study of the intravenous version of its drug in the second half of the year.
—Contego Medical closed on $5.6 million in financing for a medical device that the company says could reduce the risk of stroke. Hatteras Venture Partners led the Series B round, which also included participation from Mountain Group Partners, Lookout Capital, and Medical Mutual.
The Raleigh, NC-based company’s medical device combines an angioplasty balloon and a stent, along with a filter that can capture plaque dislodged when the stent is implanted. That plaque can lead to a stroke. The device, called the Paladin Carotid Post-Dilation Balloon with Integrated Embolic Protection, is designed to implant the stent and filter plaque in a single step rather than in separate procedures. The device has already been cleared for use in the European Union. The company is still waiting for regulatory clearance in the United States. Contego says it will use the funding to add to its executive, sales, and engineering teams. The company also says it will develop new products based on its platform technology.
—Argos Therapeutics (NASDAQ: ARGS) reached a deal to license certain rights to its cancer immunotherapy to a China-based company with an eye on bringing the drug to market in parts of Asia. The deal gives Lummy Co. Chongqing Lummy Pharmaceutical Co. rights to manufacture, develop, and commercialize the Durham, NC, company’s AGS-003, a cancer treatment that Argos has advanced into late-stage clinical trials for kidney cancer. Lummy’s rights cover China, Hong Kong, Taiwan, and Macau.
As part of the deal, Tianyi Lummy International Holdings Group, a Lummy affiliate, and the China BioPharma Capital I Fund have purchased approximately $10 million worth of Argos stock. Those entities also pledged to buy an additional $10 million in Argos stock, pending the results of an interim analysis of the company’s Phase 3 trial. Those results are expected in late 2015. Argos stands to gain even more money if Lummy finds success with the Argo immunotherapy in China. Lummy agreed to pay Argos up to $20 million in regulatory and commercial milestones, plus royalties on net sales, if the cancer treatment secures approval and reaches the market.
—Targacept’s (NASDAQ: TRGT) lone remaining drug program failed in an early-stage clinical trial. The Winston-Salem, NC-based company was studying TC-4699 as a potential treatment for diabetic gastroparesis, a condition that slows or stops the passage of food from the stomach to the small intestine. Targacept said its compound did not meet the clinical trial goals for emptying the stomach.
The gastroparesis clinical trial failure is just the latest setback for the company. Targacept’s pending merger with South San Francisco-based Catalyst BioSciences has hit a stumbling block. Shortly after the Targacept/Catalyst merger was announced in late March, Pfizer notified Catalyst it would pull out of a research and licensing deal with the company effective June 1. Catalyst originally reached that deal with Wyeth in 2009, prior to Wyeth’s acquisition by Pfizer. In a securities filing disclosing the termination, Targacept said it is reviewing what impact the end of the Pfizer partnership will have on the merger.