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Specialty pain and central nervous system drug developer Zogenix Inc. raised $18 million in a second round of venture capital to move for regulatory approval of its first late-stage licensed product and advance a second recently licensed product in clinical trials. Abingworth Management Ltd. of Menlo Park, Calif., led a round that included existing investors Clarus Ventures of South San Francisco, Calif., Domain Associates LLC of San Diego and Scale Venture Partners of Foster City, Calif. It is expected to carry the company through a regulatory approval and launch of its lead drug.

The new round is modest compared with Zogenix's $60 million first round of August 2006, but the company still has a substantial portion of that round in the bank and hopes to ride the combined funds to a significant inflection point in valuation with a product on the market.

Biotechnology veteran Cam Garner founded Zogenix in February 2006 to identify orphan and small-market drugs to treat pain and central nervous system disorders. Garner joined forces early on with developers from Hayward, Calif.-based Aradigm Corp. seeking to spin out a needle-free drug delivery system for administering the pain drug sumatriptan. That product was licensed and advanced in clinical work with proceeds from the first round and was submitted in a new drug application with the U.S. Food and Drug Administration in November.

The proprietary delivery system uses nitrogen gas to inject sumatriptan into the subcutaneous, or fatty region under the skin, providing the fastest-acting delivery, and is aimed at the $2.5 billion segment of the market for migraine drugs dominated by Amitrex, U.K.-based GlaxoSmithKline plc's patented form of sumatriptan. But the company will also develop DosePro as a platform for delivery of other drugs, both in alliances with other companies and in its own applications of off-patent drugs.

Zogenix also will use proceeds of the new round to work on development of a late-stage, controlled-release opioid product licensed from Elan Corp. plc of Ireland in November. Scale Venture Partners' managing director Lou Bock said the company met investors' schedule for clinical trials of DosePro in its first application and pursuing it as a delivery system for other drugs, and that the addition of a second licensed program broadens Zogenix's development. The company has no internal programs for generating its own products, but looks exclusively to other companies for applications of its technology and to license orphaned products.

"We had expected to file the NDA in 2007 and got that done, but we also brought a new product on board," Bock said. "We are looking for companies that might find DosePro useful, and we will get the Elan product back in the clinic."

Elan had previously conducted Phase 2 clinical trials of the time release pain product and demonstrated success in reducing pain intensity for chronic moderate to severe osteoarthritis pain in patients. Zogenix marketing director J.D. Haldeman said the company expects to have a formal end of Phase 2 meeting with the FDA and establish protocols for Phase 3 trials.

Haldeman would not disclose a valuation for the new round. He said the company did not use an outside financial adviser in raising the money. The company had legal work on the deal from Latham & Watkins LLP.

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