Neos Therapeutics has raised $15.5 million in a Series C round of venture financing to further develop its controlled-release technology for ADHD medications.
The biotech startup says it has developed a mechanism for making liquids and pills that deliver their doses in a gradual, controlled manner over time, instead of all at once. Neos, based in Grand Prairie, TX, west of Dallas, announced the new funding Wednesday. The company said it plans to seek FDA approval for its existing technology for treating attention deficit hyperactivity disorder, and use some of the money to come up with new uses for its drug delivery technology.
“There’s a real need for these dosage forms, for controlled-release,” says Mark Tengler, Neos’s co-president and chief technology officer, and the inventor of the company’s technology.
Treatment for ADHD, which Tengler called a $10 billion market, is a key area of focus for Neos. “With current ADHD drugs, it’s difficult for children to be administered multiple doses of the drug because, during the day, they are going to school,” Tengler says. “It’s a Schedule 2 drug, so it will not be dispensed at the nurse’s office. It’s important that mom can onboard the medication early in the morning before a child’s school day begins.”
Tengler says current ADHD therapies such as Adderall XR are effective at treating the disorder but that young children have difficulty swallowing the medicine as it is in tablet form. Also, a dermal patch that is available to treat ADHD is easily peeled off and some children could have an allergic reaction to wearing the patch.
Neos has five patents issued or allowed, with 10 applications pending, Tengler says. The company is developing a drug—in both liquid form and a quickly dissolving tablet—that Neos says is a bio-equivalent medicine to Adderall XR but one that is deployed through Neos’s extended release technology, he added.
Because Neos’s technology is effectively acting as a delivery platform for existing drugs, Tengler says the company will seek a 505(b)(2) approval from regulators, which permits new drug approvals by relying, in part, on the agency’s approval for another drug.
Tengler, who previously served as director of operations for PharmaPrint, a now closed California company which produced the delivery technology behind Centrum Herbals, began working on controlled-release technology in 2003 after researching expired patents in the delivery technology for chlorpheniramine and hydrocodone (Tussionex) a 20-year-old liquid cold and cough medication. Neos, which was recapitalized in 2009 to focus on ADHD therapies, is also producing a controlled-release formulation of a generic form of Tussionex, he added.
In January, the company said in a filing with the Securities and Exchange Commission that Neos had raised a little more than half of its planned total of $15 million equity offering from a dozen investors. The company raised $18.2 million in July 2012 and, in total, Neos has raised about $70 million in the last five years. The company’s investors include Burrill Life Sciences Capital, CAC, CMEA Capital, Crabtree Partners, and Delaware Street Capital.
Vipin Garg, a 20-year biotech veteran, joined Neos four months ago to help ramp up the company’s commercialization efforts. Previously, he had taken Durham, NC-based Tranzyme Pharma (NASDAQ: [[ticker:TZYM]]) public in 2011 and then merged the company with Ocera Therapeutics (NASDAQ: [[ticker:OCRX]]) two years later.
As an example of the potential of a company that is targeting the ADHD market, Garg points to the success of NextWave Pharmaceuticals of Cupertino, CA, which turned a 60-year-old off-patent drug for ADHD into a $700-million acquisition by New York-based Pfizer (NYSE: [[ticker:PFE]]).
“Because of our basket of products, we could even consider an IPO in a year’s time once the NDAs [New Drug Applications] are on file,” Garg says. “We could also co-promote with partner or someone may want to buy the whole thing.”
