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Brain Cells Inc., No Dummy, Raised $50M Before Recession Got Really Ugly

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to develop an existing small-molecule drug, called BCI-540, that has already been tested in 700 patients and shown a safety profile, so it can move fast into a new set of trials, Schoeneck says.

This compound, licensed in August 2006 from Mitsubishi Pharmaceutical, failed in clinical studies for Alzheimer’s disease, partly because the placebo group had a higher-than-expected response to therapy, Schoeneck says.

Brain Cells grabbed BCI-540 off the shelf, because it believes the drug has the ability to spur growth of neural stem cells, which can grow up to replace adult brain cells, and help treat depression with anxiety. The company is enrolling 90 patients in a mid-stage clinical trial, which should produce results in mid-to-late 2009, Schoeneck says. A second drug candidate, BCI-838, is going through animal toxicology studies, and could be ready to enter clinical trials in mid-2009 for depression and cognitive disorders, Schoeneck says.

The company has the luxury, with its generous funding, to think about building a wide pipeline of candidates. The goal is to have four product candidates in 2011, Schoeneck says. The company has 32 employees doing the work, he says.

Since clinical trials of these treatments are sure to be big and expensive, Brain Cells is seeking to form partnerships with Big Pharma companies. None have yet signed up, and many of them have taken a skeptical attitude toward the idea that stimulating growth of new brain cells is the way to treat mood disorders, Schoeneck says. Some of the skepticism is fading, although many in the pharmaceutical business want to see whether spurring growth of brain cells is really causing the improvement in mood, or whether they are just bystanders that aren’t really responsible, he says.

Still, there’s already some interest from pharma companies in forming alliances, Schoeneck says. He can afford to wait for the best deal to come along, thanks to that VC cash cushion he raised in the spring. “I’m a very happy camper,” Schoeneck says.”Whenever I put my head on the pillow at night, I’m thankful.”

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