Funds to be used to bring first drug into U.S. marketNOVATO – Raptor Pharmaceutical Corp. (NASDAQ:RPTP) has raised $15 million to complete studies of its first drug and bring it to the U.S. market.

According to founder and CEO Chris Starr, the 12 investors in the Private Investor in Public Entity (PIPE) offering were mostly funds with a health care focus.

“PIPE investors tend to do more diligence than public offering biotech traders. They’re less interested in short-term profits,” he said.

Raptor hopes the $14 million it netted in the sale will support the company until the end of 2011 and allow it to complete studies of its first drug.

DR Cysteamine is a new formulation of a drug to treat the rare disease Nephropathic Cystinosis.

The genetic condition affects only about 2,000 patients in pockets throughout the world, 500 in the U.S. Diagnosed during the first year of life, it leads to kidney failure and early death if untreated.

A previously developed drug is effective in prolonging patients’ lives, but it must be taken four times a day and frequently causes nausea and stomach pain.

Raptor licensed a promising reformulation from the University of San Diego and has been working for three years to package and test it and gain FDA approval.

Initial human studies indicated Raptor’s coated version, by dissolving lower in the gastrointestinal tract, can be taken only twice a day and doesn’t cause stomach pain. A 30-patient program is currently in the enrollment process.

“We think we can complete the trial by the end of the year and submit a new drug application to the FDA. Then, because the drug has orphan status, they’ll have six months to respond. We’re fairly certain of our results since the original formulation has already been approved,” said Dr. Starr.

The relatively small patient population will be balanced by insurance company’s willingness to pay a high price for the prevention of kidney replacement surgery and anti-rejection drugs, he believes.

Still, the market for DR Cysteamine isn’t large, about $100 million. Revenues might be about $1 million a quarter, but they could bring Raptor to profitability and support the development of a higher-value drug.

“France has given us a grant to investigate Cysteamine’s indications for the treatment of Huntington’s disease. That’s a billion dollar market,” he said.

Most biotech startups go after the billion dollar markets at once, but Raptor’s approach has always been cautious.

The company has 11 employees.

“We’ll hire a few more people once Cysteamine is approved, if it is. For now we’re happy to have funding for another year, given the reluctance of investors and the unsteady nature of the market,” said Dr. Starr.